However, delicate structural adjustments in regulation, expertise and dealer behaviour are starting to reposition the common-or-garden second cost as a extra viable and accessible choice for each advisers and their purchasers.
They have gotten a extra credible different in conditions the place a remortgage or additional advance doesn’t fairly match.
With evolving regulatory steering, rising lender participation and an ecosystem of tech-led platforms making processes smoother than ever, it’s time for us brokers to rethink our perspective and cease seeing second cost as second finest.
Regulatory shift
It has been unimaginable to disregard the Financial Conduct Authority’s current strikes to loosen up elements of the recommendation and suitability framework, reflecting a broader pivot in direction of extra pragmatic, outcomes-focused regulation.
Although not essentially headline grabbing, these adjustments may show significantly essential for second expenses the place suitability typically hinges on nuanced affordability or product-specific flexibility.
It’s not fairly a revolution however it’s an evolution
As the regulatory atmosphere turns into extra permissive round how recommendation is delivered and documented, advisers could discover second cost suggestions simpler to include right into a compliant course of, significantly when supported by tech instruments that proof suitability and allow environment friendly referrals.
This regulatory shift doesn’t imply second expenses are about to blow up in quantity. But it may cut back the friction that has traditionally discouraged many brokers from partaking with them.
Market dynamics
First cost exercise stays muted, particularly in remortgaging, as charges stay comparatively excessive and lots of debtors nonetheless cling to ultra-low fastened charges secured through the ultra-low fee period. That stated, round 1.8 million fixed-rate mortgages are set to mature in 2025, which is able to inevitably drive a rise in remortgage exercise.
Advisers who take the time to know and combine second expenses into their proposition will probably be properly positioned to reap the rewards
There will of course be debtors that stay on a ‘good’ fastened fee. It’s solely cheap that they might be reluctant to present that up by remortgaging in full, however they’ll nonetheless have monetary wants and as brokers we should be capable of cater for each eventualities.
The want for house enhancements, debt consolidation or different bills will stay for a lot of. In such circumstances everyone knows {that a} second cost product can function a versatile funding line with out disturbing the primary cost association.
Technology
One of essentially the most important developments in recent times has been the transformation of the second cost journey by expertise. What was once a fragmented and sometimes guide course of has turn out to be more and more digitised and dealer pleasant.
Second expenses are built-in into mainstream sourcing instruments equivalent to Finova, Iress and Twenty7Tec, giving brokers visibility throughout the usual recommendation course of relatively than requiring a separate workflow.
It’s time for us brokers to rethink our perspective and cease seeing second cost as second finest
CRM and case-tracking platforms now flag potential suitability, help compliant referrals and monitor circumstances from referral to completion. Packaging journeys have additionally improved by instruments equivalent to Open Banking, digital factfinds and e-signatures.
Importantly, these advances are making it simpler for brokers to take part in second cost lending with out dramatically growing their administration or compliance burden.
Broker alternative
It can be too bullish to say that second cost mortgages are on the verge of explosive development. However, they’re being steadily reshaped by a number of delicate forces right into a product that matches extra naturally into mainstream borrowing wants.
For brokers, this represents a possibility — not essentially to generate large volumes, however to supply extra rounded, versatile options for purchasers whose wants don’t match neatly right into a remortgage field.
Tech is bettering and little doubt will proceed to take action with the adoption of AI. The regulatory house can also be evolving and lender participation is diversifying.
This regulatory shift may cut back the friction that has traditionally discouraged many brokers from partaking with second expenses
We have seen new entrants equivalent to Admiral provide slick, AVM-led platforms for faster selections on loans.
As these market dynamics proceed to evolve, advisers who take the time to know and combine second expenses into their proposition will probably be properly positioned to reap the rewards.
It’s not fairly a revolution however it’s an evolution — and a new direction of travel that may’t be ignored.
Lucy Waters is managing director of Aria Finance
This article featured within the July/August 2025 version of Mortgage Strategy.
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