Criteria searches up 68% as mortgage market adjusts to ‘new normal’
The latest figures from Knowledge Bank’s mortgage criteria activity tracker show brokers’ searches up by more than two-thirds (68%) as the market responds to Covid-19 and adjusts to the ‘new normal’. The increase was especially pronounced in the residential market, with searches up by nearly four-fifths (79%).
With physical valuations and viewings beginning to resume from mid-May, demand has bounced back strongly and this is reflected in the increased search volumes in June.
At the same time, the terms brokers searched for most frequently showed less fluctuation than usual, as Covid-19 continued to dominate for the third month running. Across the residential, buy-to-let and bridging categories, the top five searches were the same as in May, albeit with changes in the order.
In the main residential category, both ‘Covid-19: Temporary Maximum LTV Restrictions’ and ‘Furloughed Workers’ featured heavily for the third month running. The ‘Temporary Maximum LTV’ term was also strongly represented in broker searches in the buy-to-let, second charge and bridging categories.
Knowledge Bank has responded to this increase in demand by establishing a weekly Criteria Clinic, enabling brokers to discuss the issues and hot topics they are most concerned about with a panel of experts from a cross-section of lenders.
The next clinic will be held at 12:30pm today (Monday 13 July). In response to the high levels of interest from brokers, it will focus explicitly on first-time buyers and higher LTVs. Brokers can sign up here: https://www.eventbrite.co.uk/e/criteria-clinic-live-with-knowledge-bank-first-time-buyers-higher-ltvs-tickets-111832026602
Criteria Activity Tracker
Top five searches performed by brokers on Knowledge Bank during April 2020
| RESIDENTIAL | BUY-TO-LET | SECOND CHARGES | EQUITY RELEASE | |
| 1 | COVID-19: Temporary Maximum LTV Restrictions | Lending to Limited Companies | Maximum LTV / Loan To Value | Early Repayment Charges |
| 2 | Help To Buy Equity Loan Scheme | First-time landlord | COVID-19 : Temporary Maximum LTV Restrictions | Property with an Annex / Outbuildings / Land / Acreage |
| 3 | COVID-19: Furloughed Workers | Requirement to be a Homeowner | Capital Raising for Debt Consolidation | Timber Framed Construction |
| 4 | Self-employed – one year’s accounts | Minimum Income – Interest-Only / Part-and-Part Single Applicant | Self-employed – one year’s accounts | Flexible Payments / Ad hoc |
| 5 | Maximum Age at End of Term | COVID-19: Temporary Maximum LTV Restrictions | Income Multiple used for Affordability Assessment | Minimum Property Value |
SELF-BUILD BRIDGING COMMERCIAL
| SELF-BUILD | BRIDGING | COMMERCIAL |
| Maximum LTV / Loan to Value | Regulated Bridging | Maximum LTV for Commercial Investment |
| Maximum LTC – Loan to Cost | Maximum LTV | Semi-Commercial Properties |
| Lend against Land | COVID-19: Temporary Maximum LTV Restrictions | Minimum Loan Amount |
| Maximum Loan Amount | Minimum Loan | Commercial Owner Occupier |
| Barn Conversion | Minimum Property Value | Mixed-Use Properties / Part Commercial |
There was slightly greater fluctuation in the second-charge, commercial and self-build markets, but only in the traditionally volatile equity release category was there wholesale change in brokers’ criteria searches, with four of the top five searches changing compared to May, and ‘Early Repayment Charges’ resuming the top spot it last occupied in March.
Matthew Corker, lender relationship manager at Knowledge Bank, commented: “Lenders have been very active in June, withdrawing and then reintroducing higher-LTV products. Many have also adjusted their affordability and allowable income criteria, as details of the extension to the Government’s furlough scheme become clearer.
“It is no surprise to find that brokers are searching more frequently for these criteria. As demand returns to the market, lenders and brokers are having to move fast to stay ahead of the curve. Brokers cannot expect to keep up with the huge number of criteria changes without deploying technology. A criteria database like Knowledge Bank is invaluable to brokers operating in the new normal.”
