Budgets being stretched as brokers search for maximum LTV
New analysis from criteria search specialist, Knowledge Bank shows a significant number of people are stretching their financial limits as a result of sky-rocketing property prices.
The research from Knowledge Bank’s industry leading mortgage criteria tracker found brokers are searching for ‘maximum loan to value (LTV)’ in their droves. The interest is coming from various sectors, with ‘maximum LTV’ either the most, or second most-searched across the second charge, equity release, self-build, bridging and commercial mortgage markets.
The range of sectors clearly illustrates the growing need for people to borrow the maximum they can, no matter how old or young. Interest also didn’t seem to be affected by whether people were buying property to live in or buying in a business capacity.
In the second charge sector there was a growth in the number of brokers searching for ‘capital raising for home improvements’. Perhaps as a result of the extended period people have spent at home, or the shift to home working, many people are now clearly attempting to renovate.
Some are going beyond home-improvement and are looking to build their own property. To develop their dream home, there are a growing number who are stretching their budget to the limit, with ‘maximum loan to value’ and ‘maximum loan to cost’ amongst the most-searched terms in the self-build sector.
Country living also appears to be in vogue, as for the second month in a row ‘barn conversion’ has registered significant interest from brokers. This may be linked to the shift away from city living, with rural areas registering significant interest since the pandemic began.
In the residential market, the second and third most-searched terms related to economic hardship. While the furlough scheme and mortgage payment holidays have undoubtedly supported millions, brokers are still searching for ‘missed or late payments’ and ‘defaults – registered in the last three years’ as some continue to struggle financially.
Searches for ‘Maximum age at end of term’ and ‘income multiple used for affordability assessment’ also make it clear that rising house-prices are stretching finances for many in the residential market.
The presence of ‘adverse credit’ in the bridging sector may be of concern to some, as the sector has in the past had issues regarding providing finance to those who cannot get a loan or mortgage elsewhere. Alongside searches for ‘maximum loan to value’, brokers in the bridging sector have also been searching for the ‘minimum loan amount’. This may be due to some using bridging loans for smaller projects, like renovating a bathroom or light refurbishments to an investment property.
Commenting on the latest results, Matthew Corker, operations director at Knowledge Bank, said: “Although those in the residential market are definitely impacted by the spike in property prices, maximum LTV is less of an issue than in other sectors. Residential 95% LTV mortgages have returned in force, however the dramatic increase in property prices is impacting affordability, and many borrowers are looking to stretch terms to lower monthly repayments leading to the rise in searches for just how old someone can be at the end of their mortgage term.
“While there have been record numbers of house-moves in the past few months, there are also a significant number of people looking to redevelop existing properties, and even build new ones. The pandemic has changed the way many of us view our home, and also the use of office space and commercial property, and these changes are resulting in renovations and redevelopments.
“Our mortgage lending criteria database is the largest and most up-to-date in the UK, and the monthly searches give a strong indication of the mortgages that lenders will issue over the next few months. The latest results from our criteria tracker suggests builders will be busy in the coming months, with renovation and building projects of high interest.”
Criteria Activity Tracker
Top five searches performed by brokers on Knowledge Bank during June 2021
| RESIDENTIAL | BUY-TO-LET | SECOND CHARGES | EQUITY RELEASE | |
| 1 | 1. Maximum Age at End of Term | 1. First Time Landlord | 1. Maximum LTV / Loan To Value | 1. Maximum LTV / Loan To Value |
| 2 | 2. Missed or Late Payments | 2. Lending to Limited Companies | 2. Maximum Loan Amount | 2. Sheltered Accommodation |
| 3 | 3. Defaults – Registered in the last 3 years | 3. Minimum Income – Interest Only / Part and Part Single Applicant | 3. Capital Raising for Debt Consolidation | 3. Ex-Local Authority Houses |
| 4 | 4. Income Multiple used for Affordability Assessment | 4. Requirement to be a Homeowner | 4. Employment – Time in Current Employment | 4. Debt Management Plan – Ongoing / Current |
| 5 | 5. Soft Footprint at DIP Stage | 5. Holiday Lets | 5. Capital Raising for Home Improvements | 5. Early Repayment Charges |
| SELF-BUILD | BRIDGING | COMMERCIAL | |
| 1 | 1. Maximum LTV / Loan To Value | 1. Regulated Bridging | 1. Maximum LTV / Loan To Value |
| 2 | 2. Barn Conversion | 2. Maximum LTV / Loan To Value | 2. Semi-Commercial Properties |
| 3 | 3. Planning Permissions | 3. Minimum Loan Amount | 3. Minimum Loan Amount |
| 4 | 4. Maximum LTC – Loan To Cost | 4. Adverse Credit | 4. Commercial Owner Occupier |
| 5 | 5. New Build Warranties | 5. Commercial Property | 5. Mixed Use Properties / Part Commercial |