2014 has been a rollercoaster of a year for the second charge mortgage market and 2015 looks set to be no different.
But what do our industry pundits predict the next twelve months will bring?
Loan Introducer asks: “What do you think 2015 has in-store for the second charge market/what would you like to see?”
Robert Sinclair, chief executive of the Association of Mortgage Intermediaries and Association of Finance Brokers:
2015 promises to be a real challenge as firms cope with acquiring their Financial Conduct Authority credit and mortgage permissions. This combined with new lender appetites will keep brokers busy. As the market is fully absorbed into FCA regulation the pressure in firms to train their people, gain threshold qualifications and introduce training and competency arrangements will stretch firms to the limits. Partnership between lenders and brokers will be essential if the industry is to flourish.
Barney Drake, operations director, Y3S Group:
2015 will be a great year for the second charge market. The FCA’s message that a secured loan quotation must be given to the customer when applying for a remortgage is a huge endorsement for our industry. The natural bi-product in the form of increased demand presents enormous growth opportunities at a time when the supply of unprecedentedly low interest rates and innovative criteria from second charge lenders has never been greater. Many packagers will be hopefully become FCA authorised, further increasing awareness and credibility of our industry’s product offering. 2015 will be year of significant growth for b2b business.
Steve Walker, managing director, Promise Solutions:
2015 should be a huge year for second charge loans with the greatest potential growth coming from the mortgage intermediary sector.
Secured loans will help brokers gain and retain more clients, deliver better outcomes and increase their commission income. Too many brokers are carrying on business as before the FCA took over second charge regulation and I hope in 2015 significantly more of them take time to learn how and why they should integrate second charge loans into their sales process. The longer they leave it the more exposed they remain to claims and retrospective regulation. All the training and support they need is available. Many are yet to realise how much they need it.
Gary Bailey, director at Blemain Group:
“2014 has been a positive year for the second charge market, with demand growing steadily. I have no doubts that this will continue in 2015.
Moving forward, mortgage brokers must seriously consider all finance options on offer – not just limit their advice to straightforward remortgages. Unsecured and secured loan options should form part of their mainstream product portfolios and they should actively be informing clients about the different options on offer. With this is mind I’m certain more opportunities will arise in the second charge market as a long overdue learning curve gains momentum. As a result of increased opportunities we’re likely to see competition intensifying in the sector, which naturally will benefit customers, with a wider selection of products on offer to suit a range of circumstances. This will undoubtedly lead to further product innovation as lenders compete to win business.
In terms of regulation, the influence of the EU Mortgage Directive will be a force to contend with next year. It’s still early to pass informed comment on how exactly this will affect the industry but brokers must prioritise getting to grips with new guidelines to ensure they’re prepared for the changes that come into play in 2016. Brokers must ensure they’re up to speed on how the rules will affect them and their business strategy as well as their customers. Those embracing regulation will be the stand out successes in 2015.
Alistair Ewing, director, Blimey Loans
As a company and an industry I feel that all of our efforts over the past three years have been geared towards putting the building blocks in place for what should be a massive year. With over 20 second charge lenders and rates as low as they have ever been, there will never be a better time to grow this market. FCA regulation is a massive game changer and while it will likely lead to a proportion of business no longer fitting criteria, the over-riding benefit that regulation will bring our industry in terms of credibility will outweigh this. I predict the first £100m month since the credit crunch will happen in 2015.
Andrea Kinnear, head of communications, Finance & Leasing Association:
By far the biggest challenge for this market will be preparations for the transfer of second charge mortgage regulation from the new credit regime into the FCA’s Mortgage Conduct of Business regime, ahead of March 2016. We’ve persuaded the regulator to consult on a more sensible timetable for some aspects of the transfer, and in 2015, the FLA will work closely with its members to ease the transition from one regime to the other.
Matt Tristram, co-founder and director of Loans Warehouse:
We believe 2015 will be a very interesting year. The FCA will release the full rules and regulations detailing how the industry will be governed over the years ahead and for a lot of brokers they will be going through FCA authorisation for the first time; a challenge, but one that our industry will no doubt rise to.
Whilst authorisation will be a big part of most brokers and lenders year, we don’t see this slowing the growth the market has enjoyed in recent years where figures taken from the Secured Loan Index would suggest we are getting close to the £800,000,000 mark.