Searches for ‘self-employed’ and ‘defaults’ became the most popular in December, according to new research from criteria search specialist Knowledge Bank.
Knowledge bank is the largest database of mortgage lending criteria held anywhere in the UK, and the monthly criteria index shows the terms that brokers are actually searching for.
The second charge market saw the biggest shake up last month. ‘Self-employed with one year of accounts’ was among the top five most search terms for the first time since July 2020. This may be a result of freelancers looking to use equity in their home to secure debts or redevelop.
The second highest searched criteria by brokers was ‘Defaults – unsatisfied’, which suggests that clients with a history of missing payments are looking to take out a second mortgage. ‘Maximum loan to value (LTV)’ and ‘child benefit’ were the only two constants from November’s top five searched terms in this category.
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 could be due to lender confidence returning, with 90% LTV mortgages being brought back.
Additionally, while confidence may continue to build with the news of a vaccine, the recent lockdown and upcoming end to the furlough scheme may cause some lenders to be more cautious moving forward.
With the Help to Buy scheme being amended from December 15 2020, there was a huge urgency for brokers looking to help their clients to secure a mortgage before the deadline – making it the fourth most searched for criteria last month.
In the bridging market, lending to limited companies reached the top five searched terms for the first time since May 2019. This suggests businesses may be looking for bridging loans secured against properties to cover costs or redevelop.
‘Heavy refurbishment’ was included in the top five search terms in the bridging market for the first time since September 2020. This may be due to the shift towards more home-based working, with clients looking to undertake major redevelopments for a home office.
Matthew Corker, lender relationship manager at Knowledge Bank, comments: “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.”
He says in light of 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,” Corker concludes.