Secured Second Charge Lending Sector Remains Buoyant During Second Lockdown

Secured second charge lending activity has maintained its momentum across much of the UK, despite difficult conditions during the recent lockdown. Published data suggests that in October, monthly volumes increased a further £19 million to reach £71 million. Total secured loan completions were also up more than 30% from the month before, reaching 1,816 loans completed.

Loan completion times were also found to have improved between September and October, averaging around 11 days compared to the previous 12 days.

Further growth is predicted

The Finance & Leasing Association (FLA) reported a major spike in second-charge in August, fuelled primarily by pent-up demand being released on the sector following the first national lockdown.

Going forward, experts believe that activity will double by the end of the current quarter.

The message from the secured loan industry is very clear: It is business as usual in lockdown 2, with no significant changes or restrictions to criteria announced following the PM’s announcement of a second lockdown.

When the coronavirus hit in March, lending figures dropped over 80%, but this time around it is very different as October showed the biggest monthly growth of 2020.

There is now no restriction on physical valuations, and for over a decade, the industry has offered a huge range of products available using Home Track or similar desktop valuation models.

The optimism stems from several lenders announcing securitization in recent weeks. First, we saw Pepper Money, owned by Optimum Credit, announce the first securitization (specifically for second charges) since the start of the pandemic to the tune of £277 million, and a huge easing of criteria followed to ensure a return to pre-COVID-19 lending levels in the coming months.

West One parent company a Specialist Finance also announced their first-ever securitization of £267 million to be split across their first and second-charge products.