The mortgage lending criteria database’s latest tracker for December revealed there had been a ‘big shake-up’ in the second charge lending market, with many brokers searching in this sector for loans for clients with ‘defaults – unsatisfied’.

According to Knowledge Bank this suggested many brokers could be working with clients with a history of missing payments who are looking to take out a second mortgage.

It said these clients could be looking to secure unsecured debt against their home and reduce the level of interest they are paying.

In the second charge arena, ‘maximum loan to value (LTV)’ and ‘child benefit’ remained in the top five search terms in both November and December.

Matthew Corker, lender relationship manager at Knowledge Bank, said: “The increase in interest in defaults in the second charge market shows there is a trend of those with missed payments potentially looking to secure debt against their property.

“This combined with the interest in soft-footprints and furlough shows there are a lot of brokers working with clients who may be struggling financially.”

Self-employed

Meanwhile the Knowledge Bank Tracker also revealed the search term ‘self-employed with one year of accounts’ was among the top five most searched terms in the second charge market for the first time since July 2020.

It thought this may be as a result of freelancers looking to use equity in their home to secure debts or even to redevelop – for example, converting a loft or a shed to a home office.

Knowledge Bank also suggested this trend could demonstrate the extent to which those who are self-employed are struggling with some looking to release extra capital from their homes to help with day-to-day living costs.

High LTV

Knowledge Bank also revealed November and December were the first months since the pandemic began that maximum loan-to-value (LTV) was not among the top searched terms in the residential market.

It said lender confidence was returning, with 90% LTV mortgages being brought back by Aldermore, Furness Building Society, Barclays, Saffron for Intermediaries and NatWest in December.

‘Furloughed worker’ and ‘soft footprints at the decision in principle (DiP)’ stage were still of interest for brokers and their clients in the residential market. Both of these criteria featured in the top five most searched terms, as they did in November.

It’s a trend which is set to continue this year with another lockdown in effect and Knowledge Bank warned it’s likely to result in lenders continuing to restrict criteria for those on the furlough scheme.

Corker said: “The market is again shifting quickly in response to the changing environment. Confidence has been building with the number of 90% LTV products available increasing in the residential market.

“This confidence may have been due to the approval of the vaccines and it remains to be seen if the latest lockdown will dent this fragile confidence.

He added: “With another lockdown, lenders are certain to continue adapting criteria to keep up with the evolving market.”

According to the tracker, Help to Buy was the fourth most searched for criteria in December as the scheme, in its previous guise, came to an end on 15 December.

Bridging

In the bridging market lending to limited companies reached the top five most searched terms for the first time since May 2019.

‘Heavy refurbishment’ was included in the top five searched terms in the bridging market for the first time since September 2020.