March saw the highest level of second charge new business so far in 2023, according to the Finance & Leasing Association (FLA) monthly update.
At the same time March registered a 12% decline in new business volumes compared to the same month last year,
However, the total value of new business over the past 12 months, amounting to £1.5bn, represents a 24% increase compared to the previous year, with new agreements rising by 17%.
Fiona Hoyle (pictured), director of consumer & mortgage finance and inclusion at the Finance & Leasing Association (FLA), said: “March saw the second charge mortgage market report its highest level of new business so far this year and the first quarter ended with new business volumes only 5% lower than in Q1 2022.
“The distribution by purpose of loan in March showed 58% of new agreements were for the consolidation of existing loans, 14% for home improvements, and a further 22% for both loan consolidation and home improvements.”
“As always, customers who are concerned about meeting payments should speak to their lender as soon as possible to find a solution.”
Nick Jones, director of Freedom 4 Intermediaries, the specialist second charge mortgage distribution arm of Freedom Finance, added: “While new business in the second charge mortgage sector dipped in March, we saw a substantial increase in 12-month volumes due to strong demand last year.
“With March recording the highest level of new business in the second charge market this calendar year, it appears that demand is rebounding as we near the end of the Bank of England’s interest rate hiking cycle.”
Jones further suggested that second charge mortgages continue to appeal to homeowners seeking the most suitable means of raising capital, be it for debt consolidation, home improvements, or to realise various aspirations via the equity built up in their properties.
“With fixed-rate mortgages more or less tripling over the past 18 months, remortgaging may no longer be a viable option for people on low fixed-term rates. This could provide a boost for the second charge market in the upcoming months,” Jones added.
