Second charge mortgages have seen significant growth, as highlighted by recent research findings.
- This market segment experienced a 17% increase in lending between January and June 2024, outpacing others.
- Homeowners accessed a substantial £804m through second charge mortgages during the first half of the year, overshadowing buy-to-let lending.
- Cumulative growth since the pandemic reveals a 27% rise in second charge mortgage uptake, compared to pre-pandemic figures.
- Industry experts stress the importance of awareness in leveraging home equity through second charge mortgages.
Second charge mortgages have emerged as a prominent feature of the UK mortgage market, with an impressive 17% year-on-year growth reported for the first half of 2024. The analysis from Pepper Money underlines this segment’s rapid ascendancy as it outpaces growth in other lending areas.
Between January and June 2024, the amount of money homeowners borrowed through second charge mortgages reached a remarkable £804 million. This figure starkly contrasts with the modest £76 million noted in the buy-to-let sector over the same timeline, illustrating the shift in homeowner borrowing preferences.
An analysis of the data post-pandemic shows that homeowners have secured a total of £3.2 billion through second charge mortgages, marking a 27% increase compared to figures before the pandemic. Such growth highlights the evolving financial strategies of homeowners seeking to maximise their property assets.
In comparison to second charge mortgages, other segments like first-time buyer lending saw a lower growth rate of 13%, while further advances accounted for just a 5% rise. Other sectors even witnessed a decline in activity during this period, further cementing second charge mortgages’ burgeoning role.
Ryan McGrath, Pepper Money’s director of second charge mortgages, suggests that although homeowner loans are still considered niche, there is a growing recognition of their potential. McGrath emphasises the need for greater awareness to ensure individuals consider secured loans like these as viable alternatives to personal loans or credit cards. According to him, the equity homeowners hold in their properties represents an untapped resource that could fulfil their financial ambitions.
The steady rise of second charge mortgages signifies their increasing relevance in the UK’s financial landscape, promising continued growth post-pandemic.
