Farewell to furlough - latest Knowledge Bank Tracker results reveal

10 June 2021

New research from criteria search specialist, Knowledge Bank shows that ‘furloughed workers’ is no longer amongst the most-searched terms by brokers. ‘Furloughed workers’ previously spent 13 months in the top five most-searched terms, after the government introduced the initiative last year.

With furlough dropping out of the top five most-searched terms in the residential market, May was the first month since the pandemic began with no Covid related searches. ‘Maximum age at end of term’ was the most-searched criteria, as the average age of first-time buyers is now over 31, according to Halifax. As house prices continue increasing, both older and younger borrowers are also extending terms to make repayments manageable.

These findings come from Knowledge Bank’s monthly criteria tracker. Knowledge Bank holds the largest database of up-to-date mortgage lending criteria in the UK, and its monthly criteria index shows the terms that brokers are actually searching for. These searches may provide an indication for mortgage completions in two- or three-months’ time.

In every month in 2021, ‘first-time landlord’ has been either the most-searched, or the second most-searched-for criteria by brokers in the buy-to-let market. In May, this trend continued with ‘first-time landlord’ the most-searched term. This clearly demonstrates the UK populace’s love affair with owning property. Owning a buy-to-let may well have become possible for more people as a result of increased savings due to the pandemic.

Despite the return of 95% loan to value (LTV) mortgages, affordability was still an issue for borrowers. This is demonstrated by the consistent inclusion of ‘first-time buyers’ in the five most-searched terms. The term has featured every month in 2021, and points to the difficulty of younger people to meet the affordability requirements of a residential mortgage. While not always the case, there is a significant number of people with larger deposits looking to get on the housing ladder by buying a rental property, where mortgage affordability is predominantly based on rental income.

This predicament is highlighted by ‘income multiple used for affordability assessment’ being the third most-searched term in the residential market. As house prices continue to accelerate, the number of borrowers looking for the maximum they can borrow against their income is set to continue growing.

The criteria terms searched in the second charge market demonstrated the two-speed economy in the UK. The pandemic has heavily impacted the income of some, with those in hospitality devastated by the lockdowns; this was reflected with brokers searching for ‘capital raising for debt consolidation’. However, on the flip side, there are those looking to build home-offices or extend their house, with ‘capital raising for home improvements’ the second most-searched term in May.

The fourth most-searched term was ‘capital raising for business purposes’, this could be for those looking to invest in their business, either by refurbishing an office, or landlords looking to raise capital to invest in a property.

In the bridging arena, ‘regulated bridging’ was the top searched term, potentially due to buyers using bridging finance when a property chain has broken down, or to purchase a residential property at auction. The prominence of ‘regulated bridging’ suggests there are some looking to benefit from the stamp duty holiday, and are using bridging loans to ensure sales go through in time for the June deadline.

Commenting on the latest results, Matthew Corker, operations director at Knowledge Bank, said: “Furlough has gone from being an unheard-of term, to a mainstay in our lexicon over the past 14 months. The fact that in May it has dropped out of the most-searched terms could suggest sunnier times on the horizon as more people return to work, as it hints that we are beginning to return to normality. However, we are certainly not completely out of the woods. There are still plenty who are struggling as a result of the pandemic, and the searches for ‘debt consolidation’ confirms this.

“The buy-to-let sector continues to go from strength-to-strength with interest from those new to the sector, and new to house buying. The continued interest from first-time buyers, indicates that despite the return of 95% LTV mortgages, some are still struggling with affordability for residential mortgages.

“With the market continuing to change at a rapid pace, criteria are constantly evolving and brokers could spend hours every day on the phone to lenders and updating spreadsheets. Using a comprehensive criteria search system can save them 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 May 2021

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