Broker criteria searches show mortgage market volatility

The latest monthly analysis of brokers’ criteria searches has pointed to a number of surprising results across a wide range of market sectors – evidence of continuing volatility in the mortgage market, according to criteria search specialist Knowledge Bank, which collects the data.

The data also showed there was no let-up for some brokers as the festive period took hold. Knowledge Bank was accessed eleven times on New Year’s Day, 66 times on New Year’s Eve, six times on Boxing Day, and even once on Christmas Day itself.

Once again it was ‘all change’ in the equity release market in December. For the third month in a row, none of the previous top five criteria searches featured this time round, and the leading search – ‘Non-Standard Construction’ – had been in the top five only twice previously. Non-standard construction covers, for example, timber-framed buildings, log-cabin dwellings and also concrete prefabricated houses, of which there are an estimated one-and-a-half million in the UK, mostly dating from the post-war construction boom.

In the residential market, ‘Help to Buy Equity Loan Scheme’ appeared in the top five for the first time since August. From March 2021, the scheme will only be available to first-time buyers and will have tight regional price caps. Prospective buyers may be looking to ‘use it before they lose it’.

Another interesting factor in the residential market is the clear shift towards mortgages for older borrowers. With searches both for ‘maximum age at end of term’ and ‘maximum age at application’ appearing in the top three. The searches for ‘interest only’ and the ‘help to buy equity loan scheme’ mentioned above, clearly show that affordability is an increasing issue for people wanting to get on the housing ladder.

In the buy-to-let market, there was a first-time entry for ‘day one remortgage’. These might represent people raising finance for renovation, for example where they have inherited a property in a dilapidated condition. The second most frequent search in this category – ‘Lending to Trustees’ – had also never previously featured in the top five.

In the self-build market, a surprising top search was for ‘Applicants paid in a foreign currency’, also a brand new entrant to the top five, which could reflect growing numbers of Britons working abroad and using the proceeds to fund a building project, or an increasing interest in this market from overseas investors looking to get a foothold in the UK property market.

Nicola Firth, CEO of Knowledge Bank said, “December has once again seen a huge amount of change in the criteria brokers are searching for. The equity release market seems to be particularly unpredictable but there have been a number of surprising new entries and re-entries across every sector of the market. The searches in residential reflect just how challenging the mortgage market remains for people wanting to get onto the housing ladder and those who will still be paying off mortgages, potentially well into retirement.

“Brokers really need to stay on their toes to keep up with the hundreds of changes to lenders’ criteria that take place every month – so no wonder some even felt the need to work over Christmas! Brokers should make it a New Year’s resolution to make sure they are using all the tools available to them in order to free up some of their own time whilst also ensuring that they give their clients the best advice possible and find them the best lender for their needs.”