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Projected Annual Total For Second Charge Lending Will

Projected Annual Total For Second Charge Lending Will Reach £1.77bn For 2022

28 October 2022

With rising interest rates, high energy prices, and an increased cost of living, more borrowers are looking at second charge mortgages to help with their finances. Lenders need to be able to cope with an increase in second charge requests from consumers looking to consolidate loans and spend money on home improvements.

The Bank of England (BoE) has predicted that inflation will keep rising and peak at 11% in October 2022, but will then remain above 10% for a few months before starting to fall. Although the goal of the BoE is to reduce inflation to 2% it could take two years or more to reach this target.

Triggered by the war in Ukraine, rising energy and food prices mean borrowers are struggling with loan repayments. As a result of all this turbulence, many consumers are looking for lenders who can provide them with second charge mortgages to consolidate their debt and even reduce monthly payments. The volume of second charge mortgage new business grew by 45% in the year to August 2022.

While the risk is higher to lenders of supplying second charge mortgages, it can still be a viable option for them as long as they have the right technology ecosystem, to support potential growth of these products. Outsourcing services to an FCA-regulated trusted provider who can supply specially trained underwriters and collections solutions can provide the support a lender needs to serve this growing sector of the market that is going to exist for some years to come.

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