A new analysis of broker search activity has revealed a sharp rise in complex mortgage enquiries, with adverse credit and specialist buy-to-let criteria dominating early 2025.
The figures, drawn from Knowledge Bank’s Q1 search insights, suggest that brokers are grappling with a new wave of clients whose financial situations reflect the ongoing strain of the cost-of-living crisis.
Searches related to unsatisfied county court judgements, defaults over £500, and mobile phone arrears all increased during the first quarter. Of these, mobile phone arrears is emerging as a particular trend, often cited as the first missed payment in a deteriorating credit profile – and one many borrowers try to rectify quickly.
While these criteria had eased during the final quarter of 2024, leading to cautious optimism that borrower finances were stabilising, the reversal in Q1 has given brokers pause for thought. The resurgence of adverse credit searches indicates that many clients remain financially vulnerable, and are reliant on brokers to find lenders willing to assess complex applications.
GREATER REGULARITY
Will Rhind, vice president of advice and growth at Habito, confirmed that these trends are being seen across the wider market. “Cases involving credit issues, like mobile phone arrears or small defaults, are cropping up far more regularly,” he said. “The encouraging news is that more lenders are now taking a pragmatic view, often overlooking missed payments on communications and utilities.”
Despite the credit challenges, there are strong signs of resilience within the buy-to-let sector. Searches for student let and unencumbered properties increased markedly in Q1, suggesting that investor confidence is returning, albeit in a more strategic form. In particular, landlords with no outstanding debt on their properties are actively exploring ways to redeploy capital into higher-yield opportunities.
EQUITY-RICH
While no definitive figures are available on the proportion of unencumbered properties in the private rented sector, Knowledge Bank’s data points to growing interest from equity-rich landlords. These investors appear to be responding to tighter regulation and diminishing margins by seeking new avenues for portfolio growth – a trend reflected in the uptick in searches for bridging finance and development funding.
“Landlord appetite hasn’t disappeared, it’s shifted,” Rhind added. “Investors are becoming more strategic, with unencumbered properties, student lets, and increasingly, holiday lets featuring more prominently in conversations we’re having at Habito.”
The student accommodation market, in particular, continues to offer opportunities for private landlords. According to research from Knight Frank, the UK faces a deficit of around 580,000 student beds, with the delivery of new stock lagging behind demand. This imbalance presents a clear opportunity for landlords able to provide well-located, compliant rental housing for students.
As brokers navigate increasingly complex borrower profiles and shifting landlord strategies, tools that enable more flexible engagement with lenders are proving vital. One such platform is Notify, which allows brokers to share a client’s case with up to nine lenders simultaneously, helping to find solutions for cases that fall outside conventional parameters.
With both credit-challenged homeowners and yield-seeking landlords seeking guidance, the role of the mortgage broker is becoming ever more critical. Rhind urged borrowers to seek expert advice. “Now more than ever, it’s important for customers to speak to an expert broker – ideally a fee-free one, like Habito. We can help them navigate the mortgage maze, understand their options, and find a solution that truly fits their circumstances.”
The first quarter of 2025 suggests that while the mortgage market is still being tested by broader economic pressures, there is renewed energy and adaptability – particularly among landlords willing to take a long-term, proactive view of their investments.
