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UK economy recovering strongly as lockdown measures are eased

Further evidence emerged Tuesday to show that the UK economy is recovering strongly, with the number of people on payroll increasing as coronavirus lockdown measures are eased.

The Office for National Statistics found that the number of payroll workers rose by 97,000 between March and April, a period when some lockdown restrictions were eased. At the end of March, pubs and restaurants were allowed to reopen in an outdoor setting, for example.

The reopening meant many workers who had been idle over the previous months of lockdown could return to their jobs even though activity levels weren’t as high as they would have been if indoor serving was allowed.

Though the most recent figures show an improvement, the U.K. has clearly seen jobs lost during the pandemic, with 772,000 fewer people on the payroll than before it struck in spring 2020.

The statistics agency also found that the overall rate of unemployment in the U.K. fell once more, to 4.8 per cent in the three months to March, down from the equivalent figure for February of 4.9 per cent.

This came despite the country being in tight lockdown in the first three months of 2021, with the statistics agency saying many unemployed were no longer looking for work.

The agency also said there were 1.6 million people unemployed in the three months to March, down 121,000 on the previous three-month period.

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The figures add weight to the Bank of England’s recent prediction that the anticipated peak in unemployment will be far lower than anticipated as lockdown restrictions are eased further following the sharp fall in coronavirus infections and the rapid rollout of vaccines. It now expects the jobless rate to peak at 5.5 per cent, against 7.75 per cent previously.

On Monday, the lockdown was eased further across most of the U.K., with pubs and restaurants allowed to reopen indoors. Cinemas and theaters were also allowed to reopen while the ban on foreign holidays was partially lifted, though the number of destinations deemed safe remains limited.

The extension of the job retention program, which has seen the government pay the bulk of workers unable to work because of lockdown restrictions, has helped soften the blow to unemployment. The growth rebound, which the Bank of England expects to hit 7.25 per cent this year, is set to see most furloughed employees return to work when it ends.

The Resolution Foundation think tank cautioned though that the labor market is unlikely to return to its pre-crisis structure given fundamental changes in the way people work and shop.

Adapting to this changed world will be a key challenge for workers, and policy makers, in the years ahead,” said Hannah Slaughter, economist at the Resolution Foundation.

Source: Business Standard

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UK economy is set to grow at its fastest pace since the Second World War

The UK economy is set to grow at its fastest pace since the Second World War, overtaking the US, according to Bank of England economist Andy Haldane.

Low Covid infection rates and vaccinations are leading to a surge in consumer spending, he said.

The unemployment rate is also lower than expected.

However, there is a risk of 1970s-style inflation rates with “boom turning to bust”, he added.

Writing in a column for the Daily Mail, Mr Haldane said: “Spring has sprung for the UK economy. This year it is set to grow at its fastest pace since the Second World War.

“It is easy to see why. As Covid infection rates have fallen sharply and the vaccination programme has been rolled out, the health risks facing us have plummeted.”

Mr Haldane, who has previously warned against pessimistic views of the economy, said consumers are returning to shops, pubs and restaurants with retail spending above pre-Covid levels.

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The housing market is also booming, while hiring and investment among businesses is also picking up, he said.

Mr Haldane predicts as many new jobs will be created this year that are lost with unemployment figures revised down from 7.75% to less than 5.5%.

“A year from now, it is realistic to expect UK growth to be in double-digits, activity to be comfortably above pre-Covid levels and unemployment to be falling,” Mr Haldane said.

“Such a tennis ball bounce in the UK economy would put it at the top of the G7 growth league table.”

Mr Haldane, who sits on the Bank of England’s Monetary Policy Committee, predicted a sharp, V-shaped recovery last year which did not materialise.

Official figures published earlier this week showed the UK economy shrank by 1.5% in the first three months of 2021, but gathered speed in March as lockdown restrictions began to ease.

The reopening of schools and strong retail spending helped the economy grow 2.1% in March, its fastest monthly growth since last August.

Mr Haldane said if health and unemployment risks continue to remain low, spending is likely to continue.

However, he warned a rise in inflation levels could turn boom to bust “derailing the country’s recovery”.

“The most likely cause of such a bust, history tells us, is an unwanted bout of inflation.”

He added: “And experience during the 1970s and 1980s demonstrates that, once out of the bottle, the inflation genie is notoriously difficult to get back in.”

Mr Haldane estimates inflation levels by the end of this year could be above its 2% target and has voted for the Bank of England to scale back quantitative easing.

“Doing so now reduces the risk of a handbrake turn – for borrowing costs and the economy – down the road, with all of the disruption this would entail for our jobs and finances,” he said.

Source: BBC

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Increases in mortgage arrears expected this year

MORE home-owners are expected to fall into mortgage arrears this year as the economic repercussions of the coronavirus pandemic continue to be felt, according to UK Finance.

The trade association, which represents the banking and finance industry, said mortgage arrears remained close to historically low levels in the first three months of 2021.

From March 2020 to the end of March this year, lenders were offering payment holidays of up to six months to borrowers whose finances had been affected by the coronavirus pandemic.

Nearly 2.9 million mortgage payment deferrals were granted while the scheme was active.

For borrowers who need additional support beyond the six-month payment holidays, lenders are continuing to offer tailored support.

UK Finance’s latest figures show a small increase of 230 mortgages in arrears compared with the previous quarter, with a total of 77,640 home owner mortgages in arrears of 2.5% or more of the outstanding balance.

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Within the total, there were 27,280 mortgages with significant arrears representing 10% or more of the outstanding balance. This was an increase of 620 on the previous quarter.

UK Finance said this figure has slowly increased since early 2020 but from a low base, largely driven by customers who had several missed payments before the pandemic.

Eric Leenders, managing director of personal finance at UK Finance, said: “While there was a slight rise in total arrears in quarter one 2021 compared to the historic low levels seen before the pandemic, the additional support from lenders has helped many mortgage customers stay out of arrears.

“With the economic impact of Covid-19 continuing to be felt, we anticipate there will be further increases in mortgage arrears during 2021.

“Any customer who is concerned about their finances should contact their lender early to discuss the options and tailored support available to them.”

Only 190 home-owner mortgaged properties and 180 buy-to-let mortgaged properties were repossessed in the first quarter of 2021.

Although Financial Conduct Authority (FCA) guidance allowed firms to re-start litigation activity from November 2020, lenders voluntarily committed to pause repossessions in line with a “winter truce” from mid-December 2020 to mid-January 2021, UK Finance said.

It added that repossessions are expected to eventually increase due to the backlog of cases that did not take place in 2020.

These cases will have been in train before the pandemic, it said, adding that repossessions are always a “last resort”.

Source: Irish News

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UK economy, gearing up for recovery, grows more than expected

UK economy grew more strongly than expected in March as it gathered speed for a bounce-back from its coronavirus slump of 2020, official data showed on Wednesday.

The 2.1% growth from February was led by the reopening of schools which, alongside COVID-19 testing and vaccinations, pushed up activity in the public sector and by retailers as consumers spent some of their lockdown savings.

There was also a burst of work in the construction sector ahead of the expiry of a tax break for home-buyers.

Analysts polled by Reuters had expected monthly growth of 1.3% for world’s fifth-biggest economy.

“Businesses and the government alike will feel this data marks a turning point,” Ana Boata, head of macroeconomic research at trade credit insurer Euler Hermes, said.

“With the ongoing easing of restrictions, confirmed this week by the prime minister, there’s hope that this could be the start of a long hot summer for British businesses.”

Over the first three months of 2021, when the country was under a third lockdown, gross domestic product shrank by 1.5%, the Office for National Statistics said.

Although a less severe hit than initially feared, Samuel Tombs, an economist with Pantheon Macroeconomics, said it meant Britain almost certainly remained the laggard among the Group of Seven rich countries for the fourth quarter in a row.

However, British GDP looked on course grow by 5% in the April-to-June period “which should mean that the UK finally hands over the wooden spoon to another G7 economy.”

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The BoE said last week it expected the UK economy would recover quickly as the country speeds ahead with Europe’s fastest vaccination programme and coronavirus restrictions are lifted.

Its forecast for 7.25% growth in 2021 would be the fastest since a Second World War rush to rearm although by comparison GDP collapsed by 9.8% in 2020, its deepest slump in over three centuries.

“Despite a difficult start to this year, economic growth in March is a promising sign of things to come,” finance minister Rishi Sunak said.

“As we cautiously reopen the economy, I will continue to take all the steps necessary to support our recovery.”

Britain’s economy remained 8.7% smaller than at the end of 2019. The BoE expects it will be back to its pre-pandemic size by the end of this year.

MORE REOPENING AHEAD

Prime Minister Boris Johnson allowed non-essential shops to reopen and outdoor hospitality to resume in April in England and there have been signs that the economy accelerated in response.

Further relaxations are due to take place next week before the lifting of almost all remaining restrictions in late June.

The ONS data showed Britain’s dominant services industry grew by 1.9% in March from February, its strongest growth since last August, while manufacturing and construction also grew more strongly than expected by analysts in the Reuters poll.

Separate trade figures showed Britain imported more goods from non-EU countries than EU countries during the first quarter for the first time since records began in 1997.

The ONS warned it was too soon to say if this was the start of a trend or just short-term disruption.

“Exports of goods to the EU continued to increase in March and are now almost back to their December level,” ONS statistician Darren Morgan said. “However, imports from Europe remain sluggish.”

Business investment fell by almost 12% in the January-March period. The ONS said some companies brought forward investment plans to late 2020 to avoid disruption caused by leaving the EU’s Single Market while others delayed plans for early 2021 to take advantage of a new tax break that launched in April.

By William Schomberg, Andy Bruce

Source: Reuters

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UK economy contracts in first quarter, but rebounds in March

Coronavirus restrictions saw the UK economy contract at the start of 2021 but the hit was smaller than first feared as growth rebounded in March, according to official figures.

The Office for National Statistics (ONS) revealed that gross domestic product (GDP) – a measure of the size of the economy – fell by 1.5% between January and March as lockdown took its toll.

A resilient performance in March helped soften the blow, with GDP rising by a better-than-expected 2.1% month on month – the fastest growth since August 2020 – despite restrictions remaining firmly in place.

The ONS said the reopening of schools in March and solid retail spending helped drive the recovery.

Chancellor Rishi Sunak said: “Despite a difficult start to this year, economic growth in March is a promising sign of things to come.”

It comes after GDP also lifted by an upwardly revised 0.7% in February as the UK economy becomes more adept at weathering Covid lockdowns.

But this was not enough to offset a 2.5% fall in January – revised down by the ONS from a previous 2.2% estimate – at the start of the lockdown.

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The ONS added that first-quarter GDP was still 8.7% below levels seen before the pandemic struck, though the gap narrowed in March to 5.9% below the pre-Covid monthly level.

Darren Morgan, ONS director of economic statistics, said: “The strong recovery seen in March, led by retail and the return of schools, was not enough to prevent the UK economy contracting over the first quarter as a whole, with the lockdown affecting much of the services sector.”

Experts expect GDP to recover strongly from the second quarter onwards as restrictions lift and the rapid vaccine rollout boosts household and business confidence.

The Bank of England last week hiked its 2021 growth outlook to 7.25% – which would be the best year of growth since the Second World War.

ING economists are pencilling in growth of nearly 5% between April and June, given the lifting of further restrictions on May 17, including indoor hospitality.

The March rebound was helped by a recovery in the hard-hit services sector, which grew by 1.9% in the month, according to the ONS.

It said retail sales “continued to show strength”, rising by 2.9% in March, though schools and education output was the biggest driver of the services growth.

The construction sector also powered ahead, with growth of 5.8% in March to recover above pre-pandemic levels, while manufacturing grew for the second month in a row, by 2.1%.

Alpesh Paleja, lead economist at the CBI business group, said: “Households and businesses have clearly adapted better to working and living under Covid restrictions, despite the brutal cost of doing so.

“A range of indicators, including CBI business surveys, point to a rebound in activity heading into summer – with the economy opening up and pent-up demand waiting to be unleashed.”

Trade figures also released by the ONS on Wednesday showed a shift away from EU countries since Brexit.

Mr Morgan said: “Exports of goods to the EU continued to increase in March and are now almost back to their December level.

“However, imports from Europe remained sluggish in the first three months of the year, being outstripped by non-EU imports for the first time on record.”

The ONS said the total trade deficit, excluding precious metals, narrowed by £8.4 billion to £1.4 billion in the first quarter.

Source: Central Fife Times

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Mortgage prisoners frustrated as MPs shun law change

Mortgage prisoners hoping for an end to high interest rates have been left frustrated and angry as MPs voted down a proposed law change that could have cut their bills by hundreds of pounds per month.

Mortgage prisoners are borrowers who took out high-interest home loans with lenders such as Northern Rock, which went under during the 2008 financial crash.

Because their mortgages were sold on to investment firms that do not offer new mortgages – known as ‘closed books’ – many have been trapped on standard variable rates as high as 9 per cent, at a time when wider interest rates have fallen to rock-bottom levels.

Many are on interest-only deals and cannot switch to a repayment mortgage, leaving them facing repossession when their term ends. There are estimated to be a quarter of a million mortgage prisoners in the UK, and the problem a ticking timebomb.

MPs voted down an amendment to the Financial Services Bill, which would have introduced a cap on the standard variable interest rates that mortgage prisoners pay.

This would have been no more than 2 percentage points above the Bank of England’s base rate, which would currently make it 2.1 per cent.

According to campaign group the UK Mortgage Prisoners Action Group, this could have cut some borrowers’ payments by up to £800 per month.

The amendment would also have made new fixed interest rate deals available to mortgage prisoners who met certain criteria, such as not being in arrears.

In a House of Commons debate on Monday night, 355 Conservative MPs voted to scrap the amendment, while 271 MPs from Labour and other parties voted to keep it.

Two Conservative MPs, Peter Bottomley and Royston Smith, voted against the Whip to support the move.

Mortgage prisoners usually find that other lenders will not accept them because banks and building societies adjusted their affordability requirements post-financial crisis and they now do not qualify.

Some have also fallen into arrears due to their high payments.

As a result, they say they have suffered financial hardship, but also emotional distress including mental health problems and family breakdowns.

Speaking to This is Money, Rachel Neale, head of the UK Mortgage Prisoner Action Group which represents around 4,000 borrowers, described the result of the Commons debate as ‘heavily disappointing’.

‘We have had 13 years of this, and we have still heard nothing of any tangible, practical solution,’ she said.

‘I don’t believe MPs really understand the mortgage prisoner’s situation,’ she added.

‘They are continually comparing us to borrowers in the open market, when we’re not in an open market – we’re essentially paying debt collectors.’

‘The Government are offering mortgage guarantees to first-time buyers – why not us?’

Neale is now calling for Government-backed mortgage guarantee scheme for mortgage prisoners, similar to the scheme it has just launched for first-time buyers.

‘We want a mortgage guarantee like the Government is offering first-time buyers,’ she said.

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‘They have no borrowing history, whereas we are borrowers who have been on high interest rates – and paid them – for 13 years.’

Because of the objection to the mortgage prisoner amendment, and one other in a separate part of the bill, the Financial Services Bill will now go back to the House of Lords for further debate later today.

The Lords voted through the bill 12 days ago, but it will be impossible to pass the legislation to help mortgage prisoners without the support of MPs in the House of Commons.

The Lords will either agree to the bill in its new form, or disagree and make alternative proposals.

If the latter happens, it will need to go back to the House of Commons again. This process is known as ‘ping pong’.

This is Money understands that Labour lords do not plan go against the Government’s position on the mortgage prisoner amendment in today’s debate, which would have kept the issue on the table.

It is unclear whether there is a way that the amendment could still be passed.

Treasury ‘will work with FCA’ on new solution – but prisoners say it could be too late

Speaking in the Commons, MP John Glen, the Treasury minister who has led the opposition to the amendment, cited Financial Conduct Authority analysis which, he said, showed that half of mortgage prisoners were not prisoners at all, because they would be eligible to switch mortgages if they chose to.

He also said the SVR cap would be ‘deeply unfair’ to borrowers in the mainstream mortgage market who were in arrears or unable to secure a new fixed-rate deal, as they would not be able to benefit from the same interest rate reduction.

On the point about offering mortgage prisoners new fixed-rate deals, he said: ‘Lending remains a commercial decision based on a variety of factors and it would not be right for the Government to compel lenders to provide products for specific groups.’

Glen announced that the Treasury would work with the FCA to review its data on the characteristics of mortgage prisoners.

However, Neale spoke of her fear for people who might not be able to hold out that long.

‘We now have to sit and wait with no other resolution while John Glen obtains more data, which means we could be stuck in this situation until next year,’ she said.

‘My real fear and worry is for people that are on a cliff edge facing repossession.

‘If they want to delay things for another six months while we are coming out of Covid, the Government should put a moratorium on repossessions for people on closed books.’

Glen also said the FCA would review how effective a previous policy to remove regulatory barriers to switching for mortgage prisoners had been, and would report on this by the end of November.

Since October 2019, lenders have been able to use a modified affordability assessment for mortgage prisoners, which means they can choose not to ask for evidence of a customer’s income and expenses or apply a stress test.

However, this is not compulsory on the part of the lender, and the UK MPAG says many mortgage prisoners are not able to benefit.

It said that it was only aware of 40 mortgage prisoners that had benefited from this to date.

‘As far as we know, it has only helped 40 people,’ said Neale. ‘And that was supposed to be the big golden nugget.’

Another way that mortgage prisoners may be able to get help is by bringing legal action against the private companies that now control their loans.

The law firm Harcus Parker is currently working with some mortgage prisoners in order to pursue such claims, but the process is at an early stage.

By HELEN CRANE FOR THIS IS MONEY

Source: THIS IS MONEY

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Prime borrowers show growing interest in second charge loans

Borrowers with prime credit ratings accounted for an increased share of second charge mortgage lending in the past six months, according to a tracker by Evolution Money.

The lender divided its customer base into two groups – those with prime credit ratings and those with below-prime scores.

It found that in the below-prime borrowers accounted for 75 per cent of second charge lending by volume between September 2020 and February this year, while prime borrowers accounted for 25 per cent.

The share of lending to below-prime borrowers in the previous six months had been 81 per cent, with 19 per cent of loans going to prime applicants

Across both groups, debt consolidation was the most common motivation for borrowing.

Borrowing increased across the board, with prime customers taking an average loan of £35,726, up from £33,242.

Below-prime customers borrowed an average of £20,588, up from £18,019 in the previous six months.

The average LTV for below-prime borrowers was 74.2 per cent, down from 75 per cent and for prime borrowers it was 77.41 per cent, down from 81 per cent.

Prime borrowers consolidated average debts of £26,657, while below-prime borrowers consolidated an average of £15,277.

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Evolution Money chief executive Steve Brilus says: “In terms of our overall product split over the last year, we have seen a notable uptick in both the volume and the value of second-charges being taken out by those customers with prime credit ratings.

“However, what tends to remain unchanged is the reasons why customers require a second-charge mortgage; this tends to focus on the debt consolidation opportunities it provides, although it’s also been clear through the pandemic period that borrowers also want to use their funding to make home improvements alongside paying off other debts.

“The increase in prime borrowers shows there is a distinct and growing customer demographic who may well have a mortgage need but are unwilling or unable to remortgage their first-charge product in order to secure their funds.

“As you might expect, the average loan amount for prime borrowers is higher and their uses for the money more varied, although we are still seeing most customers taking the opportunity to consolidate and pay off debts, with many also use the cash to improve their existing properties.

“This data – which will be updated every quarter from now on – does show second-charges may have a much broader appeal, especially to those prime borrowers who are not willing to extricate themselves from a first-charge mortgage especially if it means paying a substantial early repayment charge in order to do so.

“Between the two six-month periods we saw a 40 percent-plus increase in the volume of seconds, and with the market environment as it is, we anticipate further increases particularly as advisers work with more clients with such needs and circumstances.”

By Leah Milner

Source: Mortgage Strategy

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Homeowners look to second-charge mortgages to raise money

New research from criteria search specialist Knowledge Bank shows that homeowners are utilising second-charge mortgages to raise money to invest in buy-to-let properties, home improvements, and to consolidate debt. These three contrasting usages highlight the state of the economic situation in the country.

Knowledge Bank holds the largest database of up-to-date mortgage lending criteria in the UK and its monthly criteria index shows the terms that brokers are actually searching for. These may well be reflected in mortgage completions in two-or three-months’ time.

Capital raising featured in three of the top five most searched terms in the second charge market in March. The reasons for this capital raising varied greatly however. The second highest-searched term was ‘Capital raising to purchase a buy-to-let’, which follows the trend of investors looking to purchase rental properties as the stock market remains volatile and demand for rental property soars.

‘Capital raising for home improvements’ was fourth on the most searched terms’ list. This is potentially due to homeowners looking to renovate, add an extension, or build an office in the garden, possibly as a result of an extended period working from home. Brokers were also searching for ‘Capital raising for debt consolidation’, which landed at number five on the most searched for terms. This suggests there are clients looking to secure unsecured debts against their home to bring all their debts into one place and take advantage of the lower interest rate they will pay.

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The variety of searches in the second charge market appear to be a reflection of the wider economic situation in the UK. Since the start of the pandemic there has been a split, with those in stable employment able to save and invest due to the lack of opportunities to go on holiday or take advantage of hospitality venues; whereas those who have been hit hardest, have struggled financially and need to secure debt.

In the residential market, as the Chancellor announced an extension to the job support scheme ‘Furloughed workers’ was the most searched term for the third month in a row.

Throughout 2021, there has also been consistent interest in ‘Income multiple used for affordability assessment’, and this continued in March. This suggests despite the return of 95% loan to value (LTV) mortgages, home-owners are still looking to maximise the amount they can borrow. For the first time this year however, there was a search in the top five for lenders who would offer a mortgage to people with ‘Defaults – satisfied in the last three years’. This highlights that debt held by some of the UK’s population is not a new problem.

Demonstrating the continued interest in the buy-to-let sector, ‘First-time landlords’ was the top criteria searched by intermediaries for the second consecutive month. ‘Lending to limited companies’ featured in the top five terms searched, and has been a constant since July 2018. This is due to changes set out by the government in the 2017 Budget, including a reduction in the amount of tax relief available for interest on buy-to-let mortgages for individuals. This policy is continuing to change the landscape of the buy-to-let market.

In the bridging sector, ‘Heavy refurbishment’ was in the top five most searched for terms for the first time since December 2020. This potentially is as a result of clients turning to bridging loans to undertake major renovations, most likely extensions or remodels on their homes. A hot topic in the industry, ‘Regulated bridging’ was the top searched term by intermediaries. This could be due to homeowners using bridging finance when a property chain has broken or to purchase a property at auction.

Knowledge Bank operations director Matthew Corker said: “The second charge market clearly demonstrates the current economic divide in the UK at the moment. There are those who have increased their savings through lockdown and are now using a larger deposit to either invest in property, or add to their existing home. But there are also those who have been hit hard, either losing their job or being put on furlough.

“With extensions to the stamp duty holiday and job support scheme announced by the Chancellor during the latest Budget, lenders are continuing to adapt criteria to keep up with the evolving market. With criteria changes coming thick and fast, brokers could spend hours every day searching for the latest criteria, so using a comprehensive criteria search system can save them a massive amount of time and ensure they are providing best advice.”

BY PETE CARVILL

Source: Property Wire

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Post-pandemic changes will lead to growing need for second-charge mortgages

In a year in which positivity has been at a premium, it’s difficult not to feel a little optimistic at the moment.

It has been an incredibly testing 12 months for everyone, but there does appear to be some light at the end of the tunnel with just a few short months until – hopefully – social distancing is a thing of the past.

The impact of the pandemic on our finances will continue to be felt for some time, however.

The fact businesses will take some time to get back onto their feet led to Chancellor Rishi Sunak, announcing at the Budget that the furlough scheme is to be extended until September.

For some businesses, that support is still not enough though, with the Office of Budget Responsibility forecasting unemployment to reach 2.2 million this year.

There’s no escaping the fact that an awful lot of people are going to be feeling the financial pressure and having to make their money stretch further in the months ahead.

Balancing the budgets

Some borrowers may focus their efforts on trimming the usual monthly spending, moving to a cheaper supermarket for example or ditching those subscriptions that they don’t really make use of.

But others will look at their debt repayments, from personal loans to mortgages, and look to their trusted mortgage advisers for help.

Second-charge mortgages will undoubtedly be the solution for some of these clients. One of the most common uses for second-charge mortgages over the years has been debt consolidation.

Keeping track of a handful of different loans, interest rates and repayment dates can be stressful enough when times are good, never mind in a post-pandemic environment.

Bringing them together in one place makes sense, but a traditional remortgage may not be an option due to the risk of incurring early repayment charges or having to move up an LTV band and therefore ending up with a more costly interest rate.

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That’s where second-charges become so useful, as the borrower can tap into the equity they hold in the property, consolidate those various commitments into a single loan at a competitive rate, and leave that existing mortgage deal untouched.

As an industry, we are already seeing a sharp jump in interest in second-charge mortgages. Indeed, recent analysis suggested second-charge lending in February totalled £69.6m, up by 14.4% on the month before.

That corresponds with our own activity and is a clear sign that 2021 could be a bumper year for seconds. And that presents a big opportunity for mortgage advisers.

No longer an afterthought

Second-charge mortgages aren’t the afterthought for mainstream advisers that they once were. Part of that inevitably comes down to the influence of the regulator, ensuring an integral part of the advice process includes evaluating whether a second-charge mortgage could be the answer for your client.

But there is far greater understanding among advisers too of the role that second-charge mortgages can play, and not just for debt consolidation purposes.

A year of home working has inevitably led to many homeowners looking afresh at their properties and how they might be reconfigured to work more effectively as not only a place to live, but to work in as well.

Not all advisers are entirely comfortable with second-charge mortgages though, particularly following the FCA’s ‘Dear CEO’ letter last year which announced its intention to continue closely reviewing the seconds sector, and the advice being given.

That’s where picking the right partner can prove invaluable, whether that’s going through a master broker or working with a lender.

There is no question that you will have clients this year for whom a second-charge mortgage will be the best answer.

Now is the time to ensure you have the right processes in place for handling those cases.

By Steve Brilus

Source: Mortgage Introducer

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