Together sees a second surge in credit burdens amid industry-wide growth
Specialized lender Together saw secondary lending increase nearly a quarter between September and October, reflecting a broader trend in the industry as secondary loans top over £ 1 billion.
The lender said the increase was being driven by homeowners doing home improvement.
Commentators suggest that figures released in full tomorrow show that lending is approaching £ 140m after a second charge in November. This is the highest value since 2009.
The second lending has now also exceeded the £ 1 billion line of credit for 2021 hinted at in their October report.
Scott Clay, Together Sales Director, said, “Mortgage rates have remained at an all-time low. While many people want to free up money from their home on improvement projects, they don’t necessarily want to reschedule as they would potentially lose that cheap interest rate plus they may have to pay high prepayment penalties.
“This wouldn’t make sense if all you were looking for was £ 10,000 or £ 20,000 for home improvements and unsecured debt consolidation at what could be a much lower rate of interest. Instead, it looks like a lot of people will choose to charge a second fee that is backed up to their home to do the job and pay back the second fee along with their monthly mortgage payments. “
Matt Tristram (pictured) Managing Director of Loans Warehouse, added that 85 percent of second loans in November were for home improvements and debt consolidation.
In his October report, consolidation loans accounted for around 46 percent of the loans on offer, followed by consolidation and home improvement loans at around 30 percent and home improvement loans at around 19 percent.
Tristram added, “The Covid pandemic and successive lockdowns appear to have given people the impetus to improve their properties and settle unsecured debts. Second-fee borrowing used to be considered expensive, but now we’re seeing record lows so it’s an increasingly viable option. “
The interest rates on second loans tend to be higher than on traditional mortgages because they pose a higher risk to the lender. Right now, however, prices are at all-time lows with some offers below four percent, meaning they are becoming increasingly popular.