New starters come to the fore - latest Knowledge Bank Tracker results reveal

08 July 2021

New research from criteria search specialist, Knowledge Bank shows brokers are, for the first time since the tracker started, searching for ‘time in current employment’ both for residential and second charge mortgages. Alongside the other searches that brokers make at the same time, it strongly indicates that brokers are seeing more clients looking for mortgages that do not require them to have been in role for a significant time. This suggests a fall out from the end of the furlough scheme and increasing redundancies, leading to a surge in the number of borrowers having started new jobs and moved roles in the past six-months.

These findings come from Knowledge Bank’s industry leading mortgage criteria tracker. Knowledge Bank holds the largest database of up-to-date mortgage lending criteria in the UK, and its monthly criteria tracker shows the terms that brokers are actually searching for. These searches provide an indication of the mortgages that lenders will issue over the next few months.

Alongside searching for ‘time in current employment’, brokers also appear to be working with a lot of clients struggling financially. Although ‘furloughed workers’ has dropped out of the five most-searched terms, ‘defaults – registered in the last three-years’ has featured in both May and June. In June it was the second most-searched term, suggesting there are a growing number of borrowers defaulting on payments.

In the second charge market, brokers are also searching for ‘capital raising for debt consolidation’, which also shows the financial stresses that some families are facing, as they turn to a second charge mortgage in order to clear the debts they have built up perhaps on credit cards and bank loans.

While a rising debt problem may become an increasing cause for concern, searches for ‘time in current employment’ could be cause for optimism. It suggests there are a significant number of people who have started new jobs in the past six-months and feel secure in their employment prospects to be applying for a mortgage.

‘Soft footprint at Decision in Principle (DiP) stage’ has been amongst the most searched term in the residential market for the past five months, as the fierce competition for properties continues. Many estate agents are requiring prospective-buyers to have a DiP in place before they’ll allow viewings, so clients who see a property they like need their broker to move swiftly. This indicates that brokers are applying to multiple-lenders to ensure the client gets a decision quickly, but doesn’t want to impair the client’s credit rating as a result.

The importance of having the choice of mortgages for energy efficient housing appears to be growing. In June, ‘solar panels’ was the most searched term in the equity release arena. It was not just solar that gained attention, ‘spray foam insulation’ was also amongst the most-searched terms. This follows the news of a number of lenders in the residential and buy-to-let markets introducing ‘green’ mortgages, that are specifically for energy efficient properties.

‘Regulated bridging’ continues to dominate searches in the bridging market. With the extended stamp duty deadline falling in June, clients may have been using bridging loans to ensure chains did not collapse if one party pulled out.

Of interest in the bridging market is the introduction of ‘light refurbishment’ in the top five most-searched criteria. This may indicate that with rising property prices, many people are choosing to refurbish their homes rather than move, using a short-term bridging loan to fund this before refinancing onto a long-term mortgage. This is also likely to be used by buy-to-let investors refurbishing a property before letting it out, later remortgaging onto a buy-to-let loan when the refurbishment is complete.

Commenting on the latest results, Matthew Corker, operations director at Knowledge Bank, said: “The news that more people are starting new roles is certainly a positive. These may be fuelled by the pandemic, which has shifted priorities and increased opportunities in some industries due to flexible working.

“However, the increasing number of searches for ‘defaults’ and ‘capital raising for debt collection’ is a concern for the economy.

“Although we have moved passed the stamp duty deadline, the appetite for moving does not look set to dissipate any time soon. With this rush of clients, brokers do not have time to spend hours every day on the phone to lenders and updating spreadsheets with the latest criteria. Using a comprehensive criteria search system can save brokers a massive amount of time, and also ensure they are providing best advice.”

Criteria Activity Tracker
Top five searches performed by brokers on Knowledge Bank during June 2021

	RESIDENTIAL	BUY-TO-LET	SECOND CHARGES	EQUITY RELEASE
1	1. Maximum Age at End of Term	1. First Time Landlord	1. Maximum LTV / Loan To Value	1. Solar Panels
2	2. Defaults - Registered in the last 3 years	2. Lending to Limited Companies	2. Maximum Loan Amount	2. Maximum LTV / Loan To Value
3	3. Employment - Time in Current Employment	3. Minimum Income - Interest Only / Part and Part Single Applicant	3. Employment - Time in Current Employment	3. Early Repayment Charges
4	4. Soft Footprint at DIP Stage	4. Requirement to be a Homeowner	4. Capital Raising for Debt Consolidation	4. Spray Foam Insulation Underside of Roof
5	5. Income Multiple used for Affordability Assessment	5. First Time Buyers	5. Maximum Age at End of Term	5. Flat Roofs

	SELF-BUILD	BRIDGING	COMMERCIAL
1	1. Maximum LTV / Loan To Value	1. Regulated Bridging	1. Semi-Commercial Properties
2	2. Maximum LTC - Loan To Cost	2. Maximum LTV / Loan To Value	2. Maximum LTV / Loan To Value
3	3. Barn Conversion	3. Minimum Loan Amount	3. Minimum Loan Amount
4	4. Minimum Loan Amount	4. Commercial Property	4. Mixed Use Properties / Part Commercial
5	5. New Build Warranties	5. Light Refurbishment	5. Excluded Commercial Sectors

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