The secondary charging market has never been more active. That’s a bold statement, but hear me out.
Against a backdrop of global instability, persistent cost-of-living pressures and a prolonged ultra-high interest rate environment, seconds are no longer a niche solution. They became a common tool.
The Iran conflict has fundamentally changed the course of the economy. What was expected to be a gradual reduction in inflation and interest rates has turned into an increasingly dangerous situation.
The opportunity can be tailored to all three client needs
The Bank of England’s decision to hold the key rate at 3.75% reflects this uncertainty. Although rates are not rising (yet), the main problem for consumers is that cuts are delayed – and the possibility of future increases remains firmly on the table.
Worse, the price of the mortgage has been lowered from the expectations of the base rate. Exchange rates rise sharply with any market fears about inflation, leading to higher fixed-rate mortgages and more deal cancellations.
Meanwhile, the cost of living crisis has intensified. Rising fuel and energy costs are hitting household budgets, with predictions of a ‘Cost-of-Living Crisis 2.0’.
Customer experience
Despite these pressures, the housing market has shown resilience. Mortgage approvals recently rose to a four-month high, suggesting demand remains strong – even if confidence is weak.
However, the psychology of the borrower has changed. Clients are fee-oriented rather than rate-oriented; being aware of the risks, especially with future rate hikes, and reluctance to mess with an existing mortgage with a low initial rate.
Customers don’t work. They are simply more selective, more cautious and more resistant to traditional real estate
This last point is critical. Millions of borrowers are sitting on historically low fixed rates, secured before 2022. Repaying the entire loan at today’s rates – often more than 5% – is not easy.
An opportunity
This is where second charge mortgages come into play. They allow borrowers to increase the amount without affecting their existing original rate. In today’s environment, that one factor is at the forefront of demand.
For buyers, the opportunity can be structured around three key client needs:
1. Debt consolidation in a very expensive area
With unsecured lending on the rise and household budgets under strain, many clients are looking to refinance. A second loan can reduce monthly payments, offer longer-term payment structures and allow the borrower to avoid paying back the original low-rate mortgage.
Buyers should consider embedding the second charge into the advice system as a similar loan option
Given that consumer lending has been growing at a rapid pace over the years, this is an important opportunity for advice.
2. Increase in income without rate shocks
Whether it’s for home improvements, tax credits or lifestyle expenses, clients still need access to cash. But they increasingly don’t want to lose a down payment of less than 2% or less than 3%.
The second cost offers a ‘mixed rate’ strategy — keeping most borrowing cheap while diversifying new borrowing at current rates.
3. Serious and complex cases
As economic conditions tighten, credit profiles begin to deteriorate. Credit risk is rising and lenders are taking notice.
Second installment loans allow borrowers to increase the amount without affecting their existing original rate
Second rate lenders, who are often flexible, are often better placed to deal with complex income situations, work with close or poor credit and help the borrower arrange solutions quickly.
The basic measurement puzzle
The base rate held at 3.75% would suggest stability. But for consumers, it creates a paradox that benefits second-rate mortgages because rates are not falling as expected.
Borrowers are using a ‘wait and see’ approach, delaying full lending in the hope that rates will improve – but they still need funding today. And although inflation risks remain high due to geopolitical factors, this is unlikely to change soon. This creates a window where second mortgages become a reasonable short-term solution.
To take advantage of this opportunity, marketers should consider embedding a secondary charge in the advisory system as a parallel lending option. They should also engage with existing customers, especially those with low fixed rates and rising unsecured debts.
The psychology of the borrower has changed. Clients are fee oriented rather than rate oriented
We are in a unique position to lend. Customers are under pressure, but they are not working. They are simply more selective, more cautious and more resistant to traditional real estate.
For buyers, this isn’t a shrinking market – it’s a rebuild. Second mortgages remain in the institution.
Paul McGonigle is chief executive of Positive Lending
This article appeared in the June 2026 issue of Mortgage Strategy.
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