Knowledge Bank’s latest criteria activity index has found that brokers in the residential market were searching for ‘joint borrower sole proprietor’ (JBSP) mortgages during November 20201.
The search specialist said the increase in searches may be attributed to the end of the stamp duty holiday, with first-time buyers, who are largely exempt from stamp duty, now looking to capitalise on the reduced competition for new homes.
This was the first time since January 2021 that JBSP has featured in the five most-searched terms in the residential market. Knowledge Bank said the need for a JBSP becomes increasingly urgent as house prices continue to rise, causing issues of affordability, particularly for younger borrowers. Including a parent or relative’s income on the application can therefore allow the borrower to be eligible for a larger loan.
Despite some landlords’ concerns around impending EPC rating legislation, there still appears to be a strong number of borrowers looking to purchase a rental property in November and using second charge mortgages to do so. This resulted in ‘capital raising – purchase a buy-to-let’ featuring in the five most-searched terms in November for the first time since March.
Alongside using second charge products to invest in properties, borrowers were also looking to second charge loans to consolidate debt. As a result, ‘mortgage or secured loan arrears or defaults’ and ‘capital raising for debt consolidation’ were both in the five most-searched terms in November.
In the bridging market, smaller projects are proving popular with ‘minimum loan amount’ attracting significant interest from brokers’ clients. In response, some lenders are focusing exclusively on smaller projects, capitalising on this growing niche as some lenders prefer to only work on larger loans.
There is strong demand for small-scale bridging loans as November marked the 26th month in a row that ‘minimum loan amount’ was amongst the most-searched terms in the bridging sector.
‘Second charge loan’ also featured prominently in the bridging market last month, potentially with homeowners looking to make renovations before selling, or landlords making energy efficiency improvements to increase a properties EPC rating.
Matthew Corker, operations director at Knowledge Bank, said: “From the level of searches in November, it is clear that a rising number of parents and close family members are giving their loved ones a leg up onto the property ladder.
“With house prices still rising, affordability is still an issue for lots of borrowers, particularly those with only one income, so a JBSP product can support these buyers onto the market.
“In the rental sector, a recent survey by The Mortgage Works found over half of landlords with EPC D or below rated properties were considering exiting the buy-to-let market as a result of the new proposed EPC regulations. However, searches in the second charge market show there is still plenty of people looking to invest in the security of UK housing.
“Although sometimes viewed as a niche area of the market, there is a significant number of borrowers interested in smaller bridging loans. These smaller projects may include light renovations before selling, or exiting onto a buy-to-let product.
“As we move towards the end of the year, criteria shifts are still coming thick and fast and we look set for a record number of changes in the year. With this trend certain to continue, brokers need to ensure they are using a criteria search system so they stay up-to-date with all the latest changes.”
