Data from Legal & General Mortgage Club’s SmartrCriteria tool found that searches for furlough friendly mortgage criteria continued to fall month on month between June and July, dropping by 18%.

However, many borrowers continue to need mortgage options suitable for those will irregular incomes and repayment blemishes.

Demand for lenders willing to consider borrowers with satisfied repayment defaults remained in the top three most sought after criteria points, with searches for unsecured arrears and unsatisfied defaults also appearing in the top 15 most sought after terms.

Meanwhile, demand for criteria relating to satisfied CCJs also remained broadly consistent month-on-month, while searches for borrowers with bankruptcy jumped by quarter (24%).

This was alongside a 10% jump in criteria for borrowers with ongoing payday loan agreements.

Employment trends

While a clear trend for advisers needing lenders suitable for borrowers with credit impairments appears to be emerging, Legal & General Mortgage Club’s latest data also found an increase in searches on behalf of borrowers with contract or irregular income.

Criteria for borrowers employed via a fixed-term contract increased by 17% in July and general contract worker criteria requests also rose by 14%. Foreign income searches also jumped by 20%.

Other key findings

Legal & General Mortgage Club’s SmartrCriteria tool also recorded a 41% increase in demand for Help to Buy criteria and searches for shared ownership products also appeared in the top 20 most searched terms.

Visa-friendly mortgage criteria remained the most requested term by advisers in July. This was in conjunction with a 20% increase in requests for borrowers with foreign income.

Following an increase in demand for capital raising mortgages in May, July also saw searches for these products increase by 9%, the 4th most searched for criteria.

Borrowers still need specialist options

Clare Beardmore, head of mortgage transformation and operation, says despite the easing in restrictions enabling us to enjoy a return to more day-to-day activities, for others, the negative financial impacts of the pandemic continue to rage on.

She comments: “Our latest data shows that there is still a significant portion of those seeking a mortgage who have financial complications, such as missed payments, or credit impairments.”

“Amidst this backdrop of complex borrower needs, the role of advisers in helping clients to access competitive lending options has become ever important and for homeowners across the UK, the need for guidance and support when it comes time to find a new mortgage is clear.”

However, to tackle these more complex cases efficiently, Beardmore says advisers also need to embrace technology, which can help streamline search results and automate processes such as affordability calculations.

“With the purchase market expected to normalise over the coming weeks and in the wake of the end of the stamp duty holiday, now is the time to explore the tech options and how they can benefit their business,” she concludes.