Second charge lending falls to 18-month low in February

Second charge lending decreased by 8.79 per cent in February to £95.3m, marking the first time that volumes have dropped below £100m since August 2021.

New figures provided by second charge lenders to Loans Warehouse indicated a year-on-year decrease in lending of 45.24 per cent.

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The loan comparison site also observed a big dip in higher loan-to-value (LTV) lending compared to January 2023, with a dip of 3.59 per cent seen in loans written above 85 per cent LTV.

However, service continued to improve, with the average completion time from pack received to funding down to 14.9 days.

A second charge loan allows borrowers to use equity from a property as security against another loan. Loans Warehouse analysis showed that more than 93 per cent of these loans were used for consolidation and home improvements in February.

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Loans Warehouse said that the decrease in lending volume is being addressed by lenders within the sector, with Spring, West One, Selina Finance and UTB all making rate reductions in the last month.

It expects to see a significant increase in lending in March’s figures, as funding becomes more secure.

The latest figures are a stark contrast from January, when second charge lending was up 45 per cent year-on-year, finishing 2022 at £1.71bn.