Spreading the word about the value of second charge mortgages is akin to turning a super tanker, Enterprise Finance sales director Harry Landy has lamented.
Enterprise Finance runs training sessions and produces educational content on seconds in the form of videos but Landy reckoned the age of the industry makes it difficult to persuade brokers to consider the product alongside a remortgage.
Landy said: “We’re turning a super tanker so it’s not going to be really quick and easy.
“We have an ageing population in financial services.
“If you take an analogy you can’t teach an old dog new tricks – that’s why it might be more difficult for people to make that change.”
When the Mortgage Credit Directive came into force in March 2016 new rules meant second charge had to be regulated alongside first by the Financial Conduct Authority.
A number of brokers and lenders expected the amount of second charge business being sold to increase when the two were aligned.
But as of December 2016 new business has only grown by 4% year-on-year, Finance & Leasing Association statistics show.
Landy added: “There is still a misconception from brokers in the marketplace that second charge mortgages are only used by customers with bad credit, they are high LTV deals and provided with a high interest rate.
“We need to dispel the myth that second charge mortgages are only for those in financial difficulties in distress.”
A number of customers now take out a second charge because they’re on a 5-year fix and don’t want to remortgage and incur early repayment charges, Landy said.