The Intermediary – February 2025 - Flipbook - Page 51
T H E I N T E RV I E W
Equifinance
of the market, and our volume has increased to
a level we are comfortable with.
“Of course, between 2022 and 2024 we also
saw other key market changes, including the
advent of Consumer Duty and the wave of
effects following Liz Truss’ mini-Budget.”
During this turbulence, Marshall says
the product range for second charges has
not changed too drastically – with a “fairly
commoditised” prime market, followed by
near-prime and further into niche products
such as high loan-to-value (LTV) loans, which
have grown organically over the years.
“We took the stance right from the outset –
borne out of the way we are and were funded
and how our business started – that our
product range will be quite wide,” he explains.
“We market 100-plus products covering all
segments, from prime and near-prime to high
LTV prime. We have, over time and by virtue
of the identification of gaps in the market and
where other lenders didn’t wish to lend due to
their criteria, endeavoured to take advantage of
those spaces.
“That wide, diverse product range has helped
us a great deal. As much as we are active in the
prime space, particularly at the moment, we
have those other products to support us.
“This provides some protection if the product
became so commoditised in the prime space
that it was no longer commercially viable, we
do have those other solutions we can offer.”
In the prime and high-LTV prime spaces,
Marshall says, products and propositions are
led by price, after which lenders must have
the right IT solutions to get decisions made as
quickly as possible, and service levels to match.
In near-prime, by comparison, requirements
are more niche. Here, the value of a proposition
lies in its ability to cater for unusual
circumstances. This means it is not entirely
price led – though this is still important – but is
more focused on complexity, criteria and risk.
Seconds in a surge
One particularly big development for the
second charge space in 2024 was the arrival
of new entrants. This added competition,
Marshall says, can only be a good thing,
particularly for lenders like Equifinance that
have a broad product set and the ability to
continue innovating.
He adds: “You have to be comfortable with
the fact that you’re going to have competition.
“You can’t whinge or moan about it. The
whole picture can’t be plain sailing all the time
– there are going to be points where things
aren’t going to go as you expected.
“The important thing is to be able to rethink
and adjust strategy quickly in response to
emerging threats and opportunities.
“As the market becomes more attractive to
new entrants, that competition will become
more prevalent. We have to congratulate
ourselves that these firms want to broaden
their operations into this market.”
Indeed, Marshall points out that prime rates
in this market are nearing the same levels as
prime first charges, and from a rate point of
view are certainly more competitive than other
forms of unsecured credit.
On the soapbox
While the second charge market has grown
considerably over the years, with wide-ranging
products available to help borrowers of all
types and for many purposes, there is still work
to be done to increase awareness.
The launch of notable new entrants,
particularly a household name, will hopefully
have some effect in this arena.
Marshall adds: “We would hope that those
entities coming into the space will increase
awareness of the industry and awareness
of the product, and lead to more product
development, and so on, which will assist
consumers and give them more options.”
This might also help dispel some of the
myths that have plagued seconds – such as
that this is a product reserved for those with
adverse credit, when in fact “80% to 90% of
this market are what we would consider to
be prime customers,” according to Marshall.
Instead, this is more about the different uses of
the full market suite of products and matching
them to diverse customer needs.
Some of the lack of awareness around this
product stems from the dynamic that “nobody
gets out of bed thinking I want a second charge
loan.” Instead, they have a problem in need of
a solution. These customers then go down a
couple of routes, either going to a comparison
site and looking for a loan or looking at a
remortgage via their broker.
Those in the first tranche will often discover
that unsecured loans may not suit their needs.
“If it’s for consolidation or home
improvement purposes, there might be a need
to borrow £30,000-plus, which an unsecured
lender isn’t likely to lend to a new applicant,”
Marshall says. “Therefore, the product features
do not suit the customer.”
For example, Equifinance can lend up to
£250,000, making it an option for needs that
unsecured credit simply does not fit.
Those that turn to a remortgage – which →
February 2025 | The Intermediary
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