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Second charge lending up by 22% in February 2024

In February 2024, the Finance and Leasing Association reported that second charge lending reached £130 million, marking a 22% increase from February 2023. Alongside this, the total number of new second charge mortgages rose by 17% compared to the previous year, reaching 2,819.

Fiona Hoyle, the director of consumer and mortgage finance at the Finance and Leasing Association, highlighted that 60% of new loan agreements were for debt consolidation, with 13% for home improvements and an additional 22% for both consolidation and improvements.

Given the ongoing high interest rates and cost of living, it's understandable that many are seeking ways to streamline their finances and lower their monthly expenses through debt consolidation.

However, with the arrival of warmer weather, could we see a rise in the demand for home improvements? Historically, as temperatures increase, so does interest in enhancing homes, so we often see a surge in applications for this specific purpose. Consequently, in the upcoming months, we may see a rise in the popularity of home improvements.

While debt consolidation and home improvements tend to dominate second charge lending, it's essential to recognise its versatility. Second charge mortgages can help with various purposes, including funding dream holidays, weddings, education, and even fulfilling tax obligations, especially since credit cards are no longer accepted for tax payments.

Brokers must recognise the diverse range of purposes a second charge mortgage can help with, so they can provide suitable solutions to their clients. If uncertain about the best approach, seeking guidance from an expert is advisable to ensure clients get the right help and support.