Brokers should look at the growing second charge and equity release markets
The second charge and equity release markets could provide a 2019 lifeline for brokers if the market nosedives through Brexit uncertainty.
Lending figures for both second charge and equity release in 2018 showed significant increases and Tim Wheeldon, chief operating officer at Fluent Money, believes the two sectors could be a boon for brokers when traditional funding sectors are flat.
The Finance & Leasing Association showed the value of new business in the second charge market grew to £99m in November 2018, up 21% year-on-year and bringing the total value of the second charge market to almost £1.1bn for the 12 months to November last year.
Wheeldon (pictured) said: “Second charge mortgage origination is now running at over £1bn per annum. With the current political uncertainty, we are also now seeing plenty of evidence that more homeowners are staying put rather than moving and making home improvements instead, for which second charge loans are well suited.
“It is a message we need to broadcast very loudly. Second charge borrowing can provide a realistic alternative to remortgaging for clients wanting access to equity to meet their current requests for funds.”
Equity release adviser Key found the equity release market totaled £3.6bn in 2018, a 19% increase from £3.01bn last year, while the number of plans rose by 21% to over 47,000.
Wheeldon added: “Equity release origination topped £3.65bn last year and likewise no one can ignore the positive impact that equity release is having on meeting the needs of older customers.
“Gaining access to equity previously tied up in domestic property is allowing a generation to boost retirement funding, pay off mortgages and fund a wide variety of financial goals.
“Advisers need to see both of these sectors as areas in which they can offer a valuable service to their clients at a time when traditional lending channels are flat or losing ground.”