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13 February 2020

The first criteria index of 2020 has shown that the wider mortgage sector looks set to be a market of contrasts according to criteria search specialist Knowledge Bank, which collects the data.

In some sectors brokers are searching for completely new criteria on behalf of their clients whereas in others, search topics remained stable and consistent. The data was collected from all of the searches that brokers performed for their clients during the month of January in an attempt to place mortgages and loans.

The Equity release market really got 2020 off to a radical start with all the top five most popular searches being new. This is the first time that this has happened in any category for over a year.

The criteria that was searched on above all else in the equity release sector was early repayment charges followed closely by brokers searching for lenders who would accept clients with adverse credit. Making up the rest of the top five most popular searches were for lenders who would accept an application from a married couple in a single name, applications from those in sheltered accommodation and, of course, the lenders who would offer the maximum loan amount.

The self-build sector was another that started 2020 with a shake up as four of the top five most searched for categories by brokers were new. The search for the maximum LTV retained the top spot as this is such a crucial component of any self-build project, as is the maximum loan amount that can be secured which was the second most searched for criteria.

In addition, changing clients’ circumstances also had brokers using the system to find the maximum loan to cost available and lenders who would lend to self-employed ex pats and those with retained company profits.

Things remained slightly more consistent in the residential market with the most searched for criteria once again being the maximum age lenders will allow at the end of the mortgage term. This suggests that borrowers in 2020 are continuing to look at extending their mortgages into retirement. The search for ‘capital raising for debt consolidation’ highlights an area, or time of year, when historically borrowers look to get on top of their finances, especially if they overspent at Christmas. This search also came into the top five in the second charge category, which further indicates a desire by homeowners to get their financial ducks in a row in the new year.

Criteria searches in the secured loan and bridging markets remained relatively consistent from December 2019 with brokers using the criteria search system to find the maximum loan amount possible for their clients.

Of particular interest in the buy-to-let category was the search for lenders that will lend to expatriates. With Brexit negotiations fully underway, there appears to still be some doubt for expats living in the EU as to their futures. The fact that these people are looking at BTL properties in the UK shows that some are already hedging their bets by investing in property ‘back home’.

Matthew Corker, lender relationship manager from Knowledge Bank said, “While some sectors witnessed a radical shake up of client needs some are notably more consistent and predictable. What this does highlight is how difficult it continues to be for brokers to balance the changing needs of their clients with lenders ever-changing criteria. Effectively brokers are the pivot in a seesaw, where clients’ needs go up and down at one end and lender’s criteria does the same at the other. Brokers simply add massive value by balancing out the needs of the client with lending criteria but in order to do this they need to know what has changed and when. 2020 is going to be another year of uncertainly and change so brokers need to arm themselves with the tools to make placing mortgage cases as painless and practical as possible.”

Criteria Activity Tracker
Top five searches performed by brokers on Knowledge Bank during January 2020

	RESIDENTIAL	BUY-TO-LET	SECOND CHARGES	EQUITY RELEASE
1	Maximum Age at End of Term	Lending to Limited Companies	Maximum LTV / Loan to Value	Early Repayment Charges
2	Self Employed - 1 Years Accounts	First Time Landlord	Married Couple Application in One/Single Name	Adverse Credit
3	Interest Only	Requirement to be a Homeowner	Capital Raising for Debt Consolidation	Married Couple Application in One/Single Name
4	Capital Raising for Debt Consolidation	Expatriates	Debt Management Plan - Ongoing / Current	Sheltered Accommodation
5	Defaults - Registered in the last 3 years	Minimum Income - Interest Only Single Applicant	Child Benefit	Maximum Loan Amount

	SELF-BUILD	BRIDGING	COMMERCIAL
1	Maximum LTV / Loan to Value	Maximum LTV for Bridging	Semi-Commercial Properties
2	Maximum Loan Amount	Regulated Bridging	Maximum LTV / Loan to Value
3	Maximum LTC (Loan to Cost)	Minimum Loan Amount	Minimum Loan Amount
4	Ex Pats Self Employed	Commercial Property	Commercial Owner Occupier
5	Retained Profit in Company	Second Charge Loan	Excluded Commercial Sectors