According to data from the Finance & Leasing Association (FLA), there has been a noticeable downturn in second charge lending:
- In September alone, lending dropped by 25% to £109 million compared to the same month last year.
- The number of new agreements in September fell by 22% to 2,440.
- Looking at the three months leading up to September, the decline was 20%, with lending amounting to £354 million.
- The total number of new agreements in this quarter decreased by 17% to 7,833.
Underlying Reasons for the Decline
Fiona Hoyle, the FLA’s director of consumer & mortgage finance and inclusion, attributes this decline to a combination of factors:
- A generally weaker economic outlook has likely influenced consumer confidence and borrowing behavior.
- The comparison to last year’s figures is also vital as September last year saw a particularly strong performance in this market segment.
Loan Purpose Breakdown
Despite the overall decline, the distribution of loan purposes remained relatively stable:
- 59% of new agreements in September were for consolidating existing loans.
- 13% were specifically for home improvements.
- 23% were for a combination of loan consolidation and home improvements.
Yearly Overview
When examining the year leading up to September:
- There was a 6% decrease in second charge lending, totaling £1.4 billion.
- The total number of deals signed also fell by 7%, down to 30,964.