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Credit worthiness creeps into brokers’ top five criteria searches latest Knowledge Bank tracker results reveal

09 June 2022

New research from criteria search specialist Knowledge Bank shows a potentially worrying development in borrowers’ credit worthiness as the search for lenders accepting applicants with ‘missed or late payments’ enters the top five criteria searches in May.

Knowledge Bank’s industry leading criteria tracker reveals brokers’ most common criteria searches to find lenders who will consider their clients. The search for ‘missed or late payments’ follows recent trends in increasing interest rates and the much-publicised cost of living crisis with fuel, food and energy bills rising exponentially for households.

Although arrears are trending downwards this could serve as a warning of impending criteria tightening says Knowledge Bank CEO Nicola Firth. “With interest rates rising and household bills taking up an increasing share of household income, affordability looks set to be impacted and lenders will be forced to adapt criteria accordingly. Lenders are very aware that household incomes are being adversely affected by cost of living rises and so are likely to tweak their criteria to ensure a high level of responsible lending.”

Brokers’ favourite residential loan search in May was, like the three months preceding it, for the ‘Maximum age at end of term’ as borrowers look to extend the life of their mortgage term. Also in the residential loan category, the search for ‘Self-employed with one year’s accounts’ jumps up to second place after only entering the top five last month.

The buy to let sector continues to be a hive of broker activity and for the third month in a row it is potential ‘first-time landlords’ looking for a lender that is the top search. This is followed closely in second place by brokers searching for buy to let lenders who will consider lending to limited companies.

The most common search for clients with Bridging needs remained consistent in May with ‘regulated bridging’ taking the top spot followed closely by ‘minimum loan amount’ and ‘maximum LTV’. Like the commercial sector, activity in the bridging sector remained robust throughout May with the number of broker searches increasing month on month.

The top five searches in the commercial sector had a new entrant in May as brokers searched for lenders who would consider ‘mixed use properties that are part commercial’. This search breaks back into the top five searches for the first time since January.

Reflecting on this month’s results Knowledge Bank CEO Nicola Firth said, “with interest rates and mortgage rates set to rise throughout the year there is an increasing pressure on brokers to secure a product for their client while rates are still affordable. Additionally, with reports of low housing stock on the market the competition for houses is fierce and so buyers really need to have their mortgage offer locked and loaded so that they can act quickly to secure their dream property. As the rush for the last remaining low rates heats up brokers can avoid wasted time in the application process simply be checking criteria conditions prior to a product search.”

Brokers wanting to find out more about Knowledge Bank can visit: www.knowledgebank.uk

Criteria Activity Tracker

Top five searches performed by brokers on Knowledge Bank during March 2022

 

RESIDENTIAL

BUY-TO-LET

SECOND CHARGES

EQUITY RELEASE

1

 Maximum Age at End of Term 

First Time Landlord 

Maximum LTV

Flat Roofs

2

Self Employed - 1 Years Accounts 

Lending to Limited Companies 

Minimum Loan Amount 

Married Couple Application in One/Single Name 

3

Income Multiple used for Affordability Assessment 

Requirement to be a Homeowner 

Mortgage or Secured Loan Arrears or Defaults 

Properties close to Commercial Outlets 

4

Employment - Time in Current Employment 

Minimum Income - Interest Only / Part and Part Single Applicant 

Capital Raising for Debt Consolidation 

Maximum Age at Application 

5

Missed or Late Payments

First Time Buyers

Capital Raising - Purchase a Buy To Let

Maximum LTV / Loan To Value

 

SELF-BUILD

BRIDGING

COMMERCIAL

1

Maximum LTV / Loan To Value 

Regulated Bridging 

Semi-Commercial Properties

2

Lend in Scotland 

Minimum Loan Amount

Maximum LTV

3

Affordability Calculator 

Maximum LTV / Loan To Value

Minimum Loan Amount

4

Self Employed - 1 Years Accounts 

Second Charge Loan 

Excluded Commercial Sectors

5

Maximum LTC - Loan To Cost

Commercial Property

Mixed Use Properties / Part Commercial