Second charge market can offer lifeline for brokers – Loans Warehouse

Loans Warehouse has suggested the second charge lending market can provide a “valuable alternative” for brokers lending to 85% LTV borrowers.

The specialist brokerage has called on the market to remind brokers of the key role that second charge lending can play in filling the void.

Loans Warehouse highlighted recent Moneyfacts data that showed the total number of available mortgage products had dropped from 5,222 mortgages in March to just 2,259 in October.

The same data also revealed that the number of mortgage deals above 85% LTV had more than halved to 329.

Head of MCI Mortgage Club, Mel Spencer, commented: “The high LTV market is very limited at present and there are very few products available to help those that require a 90% product to move home, remortgage or borrow additional money for home improvements/extensions. 

“If products do become available then they don't hang around for long and you will see that they are typically here for 48 hours, which can be known as a ‘flash sale’. High street lenders are slowly working towards full capacity and are still hitting a record number of applications due this pandemic.  

“We have not seen lenders come back in this market at strength and we need more support in the industry to service these clients that require a high LTV mortgage. We have seen building societies provide products to local clients and also products such as family assist.”

While the personal loan market is still struggling in the post-national lockdown market, according to Loans Warehouse, the brokerage has reported a surge in demand for second charge products – which it suggested could help brokers support borrowers looking for higher LTV borrowing.

Loans Warehouse co-founder, Matt Tristram, added: “Loans Warehouse works across the whole spectrum of property finance which allows us a vantage point to identify sectors of the market which experience service issues.

“With brokers struggling to find options for high LTV borrowers and a lack of ERCs, second charges can provide a valuable alternative for those looking to place such cases before the market fully recovers.”

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