"In a rising interest rate environment, we should expect affordability to become even more prominent in lenders’ minds as that relates to the borrower not the product."
The ‘maximum age of the borrower’ at the end of the mortgage term remains the most common search in the residential sector suggesting that borrowers are looking to extend mortgage payments over the longest possible term. The second most searched for criteria are for ‘income multiples that lenders use for affordability assessment’, and this looks set to become increasingly important as rates rise and affordability will come under the spotlight as the basis for responsible lending.
There was consistency in month-on-month criteria searches in the buy-to-let sector with ‘first-time landlords’ still keen to enter the market, making it the most-searched for the second month running.
Criteria searches for second charge loans has seen the greatest change over the past month with three new searches making the top five. Brokers searching for lenders who would accept IVAs, both on-going and current, became the second most popular search in the sector. This suggests that even in a low interest environment with robust house prices, borrowers are still getting into financial difficulty.
Searches in the bridging and commercial lending categories remained consistent with April’s results with searches for ‘regulated bridging’ and the ‘minimum loan amounts’ the top two searches in bridging. In the commercial sector, brokers searched for lenders prepared to lend on semi-commercial properties and for those who allowed highest LTV.
Matthew Corker, operations director at Knowledge Bank, commented: “With criteria changing every single day it’s too easy to put the cart before the horse and start refining product rates without establishing whether your borrower will be accepted by the lender in the first place.
“In a rising interest rate environment, we should expect affordability to become even more prominent in lenders’ minds as that relates to the borrower not the product. It is crucial that brokers check criteria prior to a product search to avoid wasted time in the application process.”
