Broker searches for interest-only products surged by 51% last month, data from Legal & General Ignite shows, as borrowers bid to bring down the costs of owning a home.
The study from the sourcing platform follows a wave of mortgage price cuts after the Bank of England Monetary Policy Committee held the base rate at 5.25% last month, in a narrow 5-to-4 vote, following its previous rise on 3 August.
This has caused lenders to bet that the BoE is nearing the end of its rate-raising cycle, which saw the base rate climb 14 times in a row from December 2021.
However, average two- and five-year mortgage rates that were sub-2% two years ago, hover at around 6% today.
The platform points out that searches on behalf of borrowers exploring shared ownership options lifted by 32% last month, “in a reflection of both the current economic headwinds and long-term affordability concerns in the market”.
It says that the term ‘capital raising’ was the third most popular criteria, adding that “while some homeowners will be keen to release funds for expenses such as home renovations, others will be doing so to consolidate existing debts in the strained financial climate”.
In the buy-to-let sector, the term ‘first-time landlord’ came in as the joint fourth most popular search term in September.
Searches for landlord properties edged up 1% last month from August, although those looking for the term ‘regulated buy-to-let’ leapt by 15%.
Legal & General Mortgage Services managing director Kevin Roberts says: “As interest rates settle into a steadier groove, it is encouraging to see a steady stream of borrowers making inroads into the property market, with the number of searches made on behalf of borrowers growing month-on-month since June.
“We have seen particularly high interest in shared ownership and interest-only products, a reflection of both the recent decision to maintain the base rate and longstanding affordability concerns in the market.
“Notwithstanding these positive pockets of demand, the market remains a complex puzzle to navigate for advisers, borrowers, and lenders alike.
“It is important that advisers continue to work on their business, as well as within it, particularly as we continue to battle economic uncertainty.”
