Searches for lenders accepting applicants with ‘missed or late payments’ entered the top five searches on Knowledge Bank’s specialist platform last month, which it labels as “a potentially worrying development”.
The criteria tracking firm says increased use of this type of search follows rises in interest rates, inflation and living costs, which has seen food and energy bills jump.
The Bank of England’s Monetary Policy Committee has raised its key interest rate four times since December to 1%.
Inflation hit 9% in April, a 40-year high. The Bank has warned of the possibility of a recession and expects that inflation will top 10% by the end of the year, something not seen since 1982.
Knowledge Bank chief executive Nicola Firth says: “With interest rates rising and household bills taking up an increasing share of household income, affordability looks set to be impacted and lenders will be forced to adapt criteria accordingly.
“Lenders are very aware that household incomes are being adversely affected by cost of living rises and so are likely to tweak their criteria to ensure a high level of responsible lending.”
The most used residential loan search by brokers in May was, as in the previous three months, was ‘maximum age at end of term’, as borrowers look to extend the life of their mortgage term.
Also in the residential loan category, the search for ‘self-employed with one year’s accounts’ jumped to second place after only entering the top five last month.
The buy-to-let sector saw ‘first-time landlords’ looking for a lender top searches for the third month in a row, closely followed in second place by brokers searching for buy-to-let lenders who will consider lending to limited companies.
The most common search for clients with bridging needs remained consistent last month, with ‘regulated bridging’ taking the top spot followed closely by ‘minimum loan amount’ and ‘maximum loan to value’.
The criteria tracking firm says: “Like the commercial sector, activity in the bridging sector remained robust throughout May with the number of broker searches increasing month on month.”
The commercial sector saw a new entrant in its top five searches last month as brokers hunted for lenders who would consider ‘mixed-use properties that are part commercial’. This search broke back into a top-five spot for the first time since January.
Knowledge Bank’s Firth adds: “With interest rates and mortgage rates set to rise throughout the year there is an increasing pressure on brokers to secure a product for their client while rates are still affordable.
“Additionally, with reports of low housing stock on the market the competition for houses is fierce and so buyers really need to have their mortgage offer locked and loaded so that they can act quickly to secure their dream property.
“As the rush for the last remaining low rates heats up brokers can avoid wasted time in the application process simply by checking criteria conditions prior to a product search.”
