A fourth quarter surge in the second charge mortgage market is set to tip lending back to pre-pandemic levels, according to national broker Loan.co.uk.
Following official figures published today, the company, which has seen a dramatic increase in business over the Autumn, has calculated that lending levels will surpass growth seen in the years leading up to the pandemic.
Finance and Leasing Association figures showed October’s second charge lending had soared to £109m during the month, with average loan sizes at more than £42,800.
Paul McGerrigan, CEO of Loan.co.uk, said: “The market returned to strength in March this year, with growth really taking off over the late spring and summer – July lending across the industry topped the £100m mark for the first time since February last year.
“Comparing the FLA figures out today with our own October and November performance, we calculate that the UK’s annual secured lending will comfortably exceed 2018’s total of almost £1.07bn – though this year’s final numbers may come in slightly behind the peak (post 2008 crash) of £1.3bn achieved in 2019.”
McGerrigan explained that from customer feedback and analysis of industry data – the secured lending market had come under high demand from several sides.
He added: “Record demand for property across the country, fuelled by people’s race for more space and the huge added benefit of the stamp duty holiday, has driven housing prices up much faster than affordability, and with requirement outstripping supply considerably, many homeowners have resorted to developing their existing property – anything from the addition of home offices to major extensions.
“This, as well as a growing appetite for consumers to assess their current debt position, caused by the pandemic, has fully re-ignited the market.
“Looking to the future – second charge lending typically reduces over December as families concentrate on Christmas, with a reawakening in January. Judging by this year’s growth in lending and house prices, we believe that – if the economy remains stable and unemployment under control – next year will experience growth beyond 2019’s figures.”
