Brexit shock fails to knock second charge lending off track

The second charge sector continued to shake off post-Brexit troubles, with new business volumes in traditionally-quiet August up 6% on 2015, the second edition of specialist master broker Enterprise Finance’s Second Charge Report reveals.

The report – drawing on data from the Finance and Leasing Association – shows that in July the total value of monthly second charge lending actually increased by 4% from £70m in June to £73m, post-Vote.

This continued the momentum from May and June’s post-MCD rebound. Compared to a year earlier, July’s total is comparable with the £74m observed by the FLA in July 2015. Moreover, August’s total also of £73m, 6% higher than August last year, continued that rebound.

On an annualised basis, the market has consolidated at just under £900m (£889m in the 12 months to August) of gross lending after a period of prolonged growth through 2015.

This flattening reflects the period of MCD-related market restructuring, but it also puts the industry on a stronger footing for sustained, longer-term growth in future. The second charge market is in good health, though it’s too early to tell what the long-term effects of Brexit will be on the rate of growth, with months of exit talks and trade deals yet to come.

Experts say that there are several reasons why the outcome of the Referendum failed to dent an increase in second charge lending.
The economic uncertainty resulting from the vote may have encouraged more borrowers to consolidate their debts, to make their payments more affordable and to avoid potential future shockwaves.

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