Paying off bills has become a major issue in the second charge market with three out of the top five broker-related searches cover debt enquiries or people with county court judgements, according to mortgage database Knowledge Bank.
“This demonstrates that a number of people are struggling financially and are using their homes to secure debt against, says the research body, which holds over 120,000 search criteria from over 250 lenders.
It adds: “The one constant in January was ‘Maximum loan to value’ which has been the top searched ‘second charge’ criteria since May 2019.”
Knowledge Bank’s monthly criteria index shows terms that brokers are searching for, which may be reflected in mortgage completions in two to three months. Broker searches for furloughed workers hit the top spot in the residential market, for the first time since August 2020.
The database says: “This shows brokers were working with an increasing number of clients on the job support scheme, who were potentially struggling to get a mortgage. This became increasingly difficult in January as lenders have continued to restrict criteria for those on furlough.”
The body added that ‘joint borrower sole proprietor’ searches hit the top five most-searched terms in the residential market for the first time since February 2020, despite lenders returning to the 90 pe cent LTV market in recent months.
“This suggests that, even though higher LTV products are back on the market, the Bank of Mum and Dad – or even grandad and grandma – is continuing to be essential for many people looking to get on the housing ladder,” says the data body.
The average price paid by first-time buyers increased by 10 per cent in 2020 to over £250,000 according to the Halifax House Price Index last month.
The research body added that ‘first time buyers’ searches made the top five terms in the buy-to-let market for the first time since February 2020.
It adds: “This could be an option for those whose income is not high enough to afford a mortgage, but have a large deposit and want to invest in property. ‘first-time landlord’ also remained in the top two most-searched terms for the eighth month in a row, showing interest in investing in property is not just restricted to first-time buyers.”
‘Lending to limited companies’ was the top search term in the buy-to-let market. This could reflect landlords setting up companies before new tax changes come into force effect. From April this year, landlords will no longer be able to offset any of their mortgage interest against their tax, as they were previously able to.
Knowledge Bank operations director Matthew Corker says: “As we move into 2021, the mortgage market continues to shift dramatically. There is significant interest in debt consolidation in the second charge market, while the buy-to-let sector continues to attract interest from both potential and existing investors.
Corker adds: “The furlough scheme is at the top of brokers requests in the residential category as thousands of families are, or have now been, affected by being on furlough. Just how supportive lenders will be of those that have been on the scheme is still being established. On the positive side, support from families appears to be helping buyers onto the ladder. This trend looks set to continue despite 90 per cent LTV mortgages coming back to the market, as the average price for first-time buyers continues to rise.”
