Broker searches for interest-free mortgages soar

Legal & General’s new Ignite platform has seen a rise of 53 per cent in one month for broker searches for interest-only mortgages.

The newly relaunched platform says: “This highlights that borrowers could be looking to reduce their monthly costs for a period of time before switching back to a capital repayment mortgage if rates become more favourable.”  

It also saw a 40 per cent increase in searches for Help to Buy, even though the deadline for the government scheme closed on May 31 and says: “There is a strong demand for similar government-backed schemes to tackle affordability issues.”  

Its diagnostics show that there was a 14 per cent rise in searches on behalf of first time buyers in June, while searches in relation to affordability also increased by 21 per cent. Searches in relation to minimum income requirements rose too, by some 17 per cent.  

However it appears to be the private rental sector that is the driving force in mortgage market activity right now with a a 32 per cent increase in enquiries for multi-unit freehold blocks and a 38 per cent rise in searches for rental income, which “highlights that landlords are a key driver in the market” according to an L & G statement.   

It continues: “These increases point to a resilience in the market and among first-time buyers, however, more must be done to address affordability issues for the demographic. These buyers could be looking to maximise rental income, as rents across the UK continue to rise.”

The platform adds that searches for several other property types also increased in June. Enquiries in relation to right to buy and right to acquire increased by 17 per cent last month, while searches regarding ex-local authority properties saw a big leap of 29 per cent.

Under Right to Buy rules in England a buyer could enjoy a 35 per cent discount on market value if they have been a public sector tenant for three to five years.  

Meanwhile favourable exchange rates and gently falling UK house prices continue to attract foreign investors. Searches on their behalf in June rose 16 per cent while enquiries on behalf of customers with a permanent right to reside or indefinite leave to remain jumped by a hefty 38 per cent.  

Legal & General Technology head of mortgage products Jodie White comments: “It’s clear that the mortgage market remains robust despite ongoing issues with affordability, rising interest rates and stubborn inflation. It’s positive to see that market activity is still being driven by specific sectors including buy-to-let, overseas buyers, and by increased demand for particular property types.”