Analysis of broker criteria searches in February throws up surprises
10 March 2020
The February criteria index has thrown up a number of surprise results with some sectors experiencing unprecedented change according to criteria search specialist Knowledge Bank, which collects the data.
It was all change in the equity release sector with an all-new top five most popular searches in February. This is the first time that this has happened in over 12 months and demonstrates the speed with which change happens in this sector. The most popular search was by brokers seeking the minimum age of the applicant the lenders would accept. In a close second place was brokers searching for lenders offering an equity release inheritance protection guarantee. Although this criteria has been often searched for in the past, this is the first time it has broken into the top five.
The residential sector offers a slightly more balanced picture with brokers looking for lenders offering the maximum age at the end of the term once again the most popular search in this category. New additions to the top five this month did include the search for lenders allowing joint borrowers for a sole proprietor and a search on income multiples for affordability assessment.
Second charge loans saw two new additions to their most popular searches in February. These were for lenders allowing CCJs registered in the past 3 years and existing secured loan or mortgage arrears or defaults. The rise in searches for lenders allowing these criteria conditions suggests a worsening arrears picture within the secured loan sector.
It was a far more settled picture in the buy-to-let category with four of the top five searches consistent with the previous month. The new addition to the most popular searches in this search was for first time buyers, which is an encouraging sign that borrowers are still interested in buy-to-let as an investment opportunity.
The commercial sector was another that enjoyed some stability in clients’ needs with four of the top five searches consistent with the previous month. Brokers’ clients are continuing to task them to find the maximum LTV permitted and also to accept semi-commercial properties.
There were changes to the most common searches in the bridging category in February with development finance coming in at third spot. The search by brokers for lenders offering development finance hasn’t been in the top five searches since November 2019 and so may be a sub-set of this sector to watch.
Matthew Corker, lender relationship manager from Knowledge Bank said, “February really threw up some surprising results, most notably in the equity release sector where it was all change. The extent and speed of change in the criteria needs of borrowers from month to month shows just how essential it is for brokers and lenders to adapt to changing demands. We work with lenders every day to help them use this data to evaluate the market and adapt their criteria accordingly. Because criteria searches happen at the onset of the advice process, prior to any product sourcing, it presents lenders with a unique opportunity to adapt to a changing market and drives change and innovation.”
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|
RESIDENTIAL |
BUY-TO-LET |
SECOND CHARGES |
EQUITY RELEASE |
|
1 |
Maximum Age at End of Term |
Lending to Limited Companies |
Maximum LTV |
Minimum Age at Application |
|
2 |
Interest Only |
First Time Landlord |
County Court Judgements - Registered in the last 3 years |
Equity Release Inheritance Protection Guarantee |
|
3 |
Income Multiple used for Affordability Assessment |
Requirement to be a Homeowner |
Mortgage or Secured Loan Arrears or Defaults |
Cash Reserve / Facility for Additional Funds |
|
4 |
Defaults - Registered in the last 3 years |
First Time Buyers |
Capital Raising for Debt Consolidation |
Flat Roofs |
|
5 |
Joint Borrower Sole Proprietor |
Minimum Income - Interest Only / Part and Part Single Applicant |
Debt Management Plan - Ongoing / Current |
Maximum LTV / Loan To Value |
|
|
SELF-BUILD |
BRIDGING |
COMMERCIAL |
|
1 |
Maximum LTV |
Minimum Loan Amount |
Maximum LTV |
|
2 |
Maximum Loan to Cost |
Regulated Bridging |
Semi-Commercial Properties |
|
3 |
Purchase of Land |
Development Finance |
Minimum Loan Amount |
|
4 |
Add Fees to Loan above Max LTV |
Maximum LTV for Bridging |
Maximum LTV for Commercial Investment |
|
5 |
Rental Income as Additional Declared Income |
Minimum Property Value |
Commercial Owner Occupier |
