Aldridge: MMR could stifle second charge lending

February’s West One Index documents the improving state of the short-term loan market, with second charge gross bridging lending rising by 42% since the start of 2013.

Aldridge said: “I would strike a note of caution about the positive trend pattern with second charge lending as I would suspect that the introduction of revised affordability criteria following the MMR changes could have a considerable impact in the second half of the year as affordability models impose themselves on lenders’ willingness to lend.”

Second charge short-term loans also outpaced first charge bridging loans over the last two years, increasing in volume by 57% compared to 51% since January 2012.

He admitted he was not surprised by such statistics, as there has been a reduction in rates and an absence of major banks from the sector.

Aldridge added: “Figures on the second charge market will certainly give some lenders in the sector reasons to be optimistic about their business potential over the coming months.

“What the index does do is send out the right message to the broker fraternity. Any evidence that shows that there is latent potential in a sector that to date has been ignored by a significant number of brokers has to be welcomed.”

“It is often not the specific figures that brings the encouragement, but the trend that those figures indicate. The index certainly reflects some very positive trends.”

Capital Bridging has seen its proportion of secured second charge lending drop over the last 12 months, yet Aldridge attributed this to the company’s lending policy, which focuses on first charge lending.