Fluent: MCD fuelled seconds

The introduction of the Mortgage Credit Directive in 2016 has played a key role in making second charge more of a success in the past 12 months, Fluent for Advisers head of intermediaries Jeff Davidson said.

He said that after the credit crunch, second charge mortgages along with the rest of the lending market were barely treading water

But Davidson said: “While the first charge sector picked up, progress was slow in the second charge space, even though there was clearly a need for such a product as a more specific, faster and shorter-term alternative to a remortgage.

“It cannot be underestimated how much the sector owes to the implementation of the MCD in 2016 and the formal recognition by the regulator that a second charge mortgage could be a valid choice for people seeking to raise capital from their properties.

“I am in no doubt that the regular monthly increases in new second charge mortgage business which we have seen in the past twelve months, flow in part from the Mortgage Credit Directive (MCD) of 2016 and the knock on effects of becoming formally regulated.

“With the FCA taking over the direct regulation of the sector, it began the process of legitimising the status of secured loans, ensuring that a second charge mortgage should be treated as an acceptable alternative option to a remortgage or further advance.”

Davidson added: “It has taken time, but new business momentum is building as demonstrated by the increasing numbers reported by the FLA, which has seen regular month on month increases in volumes.

“Lenders and distributors like Fluent for Advisers have also put in the time to educate and inform adviser firms, but the MCD gave advisers the confidence to reconsider second charge mortgages by legitimising the sector within a formal regulatory framework.

“It has probably been the biggest single factor in re-establishing second charge mortgages in the minds of advisers and their customers.”