Budgets being stretched as brokers search for maximum LTV
Brokers are searching for ‘maximum loan to value (LTV)’ in their droves with ‘maximum LTV’ either the most, or second most-searched across the second charge, equity release, self-build, bridging and commercial mortgage markets, according to criteria search specialist, Knowledge Bank.
In the second charge sector there was a growth in the number of brokers searching for ‘capital raising for home improvements’. Whilst ‘maximum loan to value’ and ‘maximum loan to cost’ came in 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.
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.
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.”