MCD- Positive PR for secured lending.

It could be argued that MCD has had an overwhelmingly positive effect on the sector, many were worried about its introduction but MCD has turned out to be a bigger PR exercise than any individual firm could have carried out. The directive has helped create more awareness of second charges among both intermediaries and their clients. In turn this has helped fuel demand.

The MCD has also increased the respectability of the market; helping move it away from the subprime label it carried pre 2008. The alignment of second charges to the first charge market has made the sector significantly more mainstream, to which the rise in applications is testament.

The synchronization with the first charge market has also seen a lot of lenders introduce early repayment charges more similar to those seen on standard residential mortgages, which brokers who are used to writing first charge mortgage business will be familiar with.

The real positive of the more competitive market is that rates have decreased continually. There has also been an introduction of a much broader range of products, including discount rates, base rate trackers and longer fixed term rates. The days of offering just a standard variable rate are well and truly over, which can be only a benefit to the client.

Fortunately the Brexit vote has not had a major impact on seconds so far. Some lenders reduced their LTV’s on products but thankfully this was short lived.

The biggest positive to have come out is that customer outcomes have become the main focus. The MCD introduced the need for advisors to make clients aware of all the options and not just rely on a re-mortgage all of which is good news for the end borrower.

For more help and advice please do not hesitate to contact us at Hoskin Home Loans.

Ian Chambers    @HoskinHomeLoans

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