More borrowers are turning to second charge borrowing as the cost of living rises, according to the latest criteria tracker from Knowledge Bank.

‘Capital raising for debt consolidation’ featured prominently in brokers’ searches in the second charge sector in January, along with searches for ‘mortgage or secured loan arrears or defaults’.

Residential

In the main residential space, ‘defaults – registered in the last three years’ were into the top five most-searched terms in January for the first time since last September.

‘Time in current employment’ in the residential sector was also a top search for the second month running, which Knowledge Bank says suggests there are more newly employed borrowers on the market.

January marked the ninth consecutive month that ‘maximum age at end of term’ was the most-searched term by brokers in the residential market. With house prices still continuing to rise, some borrowers are stretching terms past retirement age to reduce monthly payments.

Buy-to-let

Both ‘first-time landlord’ and ‘first-time buyer’ featured in the most-searched terms in January. Knowledge Bank says first-time buyers looking for a foothold on the ladder may be turning to buy-to-let properties as demand for rental properties is still high and this is driving a sustained period of rents increasing.

Bridging

Searches in the bridging market primarily focused on ‘regulated bridging’ for the third consecutive month. Regulated bridging is now consistently in the top two and has been for 18 months.

Brokers with bridging clients were also looking for ‘minimum property value’ in January and these searches suggest borrowers are using bridging loans for smaller projects or purchases, potentially looking to buy a property in need of renovation.

Commercial

With the changing face of the high-street, searches in the commercial sector centred on ‘semi-commercial properties’. These mixed-use properties may become more common as shopping continues to shift online and businesses adopt hybrid working practices.

Knowlege Bank operations director Matthew Corker says: “While lockdowns appear to be a thing of the past, the economic impact of the pandemic is likely to continue impacting borrowers for years.

“The cost of living is rising significantly and some borrowers are turning to second charge products to help cope with the financial pressures.

“At the end of the furlough scheme there were a number of brokers searching for time in employment, and these searches have continued. Earlier in 2021 employees may have held off moving due to economic uncertainties, however it appears the jobs carousel is now in full swing.

“Regulated bridging remains a popular search by brokers as some property owners use bridging loans to make improvements to their own homes. The searches for minimum property values suggests borrowers are looking at properties in cheaper parts of the UK, or considering a property in need of renovation.”