Knowledge Bank has reported a change in criteria searches in December.
The largest change last month was in the second charge market. ‘Maximum loan to value (LTV)’ and ‘Child benefit’ were the only two constants from November’s top five searched terms. The second highest searched criteria by brokers was ‘Defaults – unsatisfied’ which the search firm said suggests that clients with a history of missing payments are looking to take out a second mortgage.
‘Self-employed with one year of accounts’ was among the top five most searched terms in the second charge market for the first time since July 2020. This may be as a result of freelancers looking to use equity in their home to secure debts or even to redevelop, Knowledge Bank said.
Interest in the maximum LTV clients can borrow has been a constant for most of this year across the mortgage markets, as lenders have reduced their appetite for risk in response to the pandemic. However, November and December were the first months since the pandemic began that maximum LTV was not among the top searched terms in the residential market. This is likely due to 90% LTV mortgages being brought back by Aldermore, Furness Building Society, Barclays, Saffron for Intermediaries and NatWest in December.
‘Furloughed worker’ and ‘Soft footprints at the decision in principle (DiP)’ stage were still of interest for brokers and their clients in the residential market. Both of these criteria featured in the top five most searched terms, as they did in November.
Knowledge Bank said the continued interest in soft footprint applications in residential searches may be connected to the furlough scheme, as clients with lower credit scores are looking for applications that will not harm their chances elsewhere. Another potential reason may be the stamp duty holiday.
With the Help to Buy scheme being amended from 15 December 2020, it is unsurprising that it was the fourth most searched for criteria in December.
In the bridging market lending to limited companies reached the top five searched terms for the first time since May 2019. Knowledge Bank said this suggests businesses may well be looking for bridging loans secured against properties, either to cover costs or to redevelop and office space. It might also hint that landlords are using bridging loans to renovate a buy-to-let property.
‘Heavy refurbishment’ was included in the top five searched terms in the bridging market for the first time since September 2020.
Matthew Corker (pictured), lender relationship manager at Knowledge Bank, said: “The market is again shifting quickly in response to the changing environment. Confidence has been building with the number of 90% LTV products available increasing in the residential market. This confidence may have been due to the approval of the vaccines and it remains to be seen if the latest lockdown will dent this fragile confidence.
“The increase in interest in defaults in the second charge market shows there is a trend of those with missed payments potentially looking to secure debt against their property. This combined with the interest in soft-footprints and furlough shows there are a lot of brokers working with clients who may be struggling financially.
“With another lockdown, lenders are certain to continue adapting criteria to keep up with the evolving market. It is now physically impossible for any mortgage broker to keep all the different criteria in their heads. So, it is now more important than ever for brokers to use a comprehensive criteria search system to ensure they can provide their clients with best advice – and evidence that they have done so.”