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As the mortgage sector struggles with the uncertainty of future rate rises, tax changes and the cost-of-living crisis, broker’s criteria searches reveal a worrying decline in borrowers’ circumstances, the latest data from Knowledge Bank shows.

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Knowledge Bank’s September criteria index reveals that 35% of all criteria changes during September were made to residential lending criteria.

The top search was for the maximum age at the end of the term as they look to spread repayments over the longest possible period.

However, the search for lenders accepting borrowers with late or missed payments entered the top five residential loan searches for the first time in six months.

Knowledge Bank suggests this shows a decline in borrowers’ financial circumstances.

The buy-to-let (BTL) sector accounted for 33% of all criteria changes during the month but the most common searches remained consistent with ‘lending to limited companies’ and ‘first time landlords’ the top two searches for the sixth month in a row.

Read about the UK Housing Market via our Specialist Residential & Buy to Let Division

Meanwhile, the equity release sector saw the greatest shake up in criteria searches with three of the top five searches new from last month.

The most popular search was for equity release lenders who would lend on properties with an annex and, combined with the search for acceptance of debt management plans also in the top three.

Knowledge Bank says this suggests that borrowers are looking to consolidate their households.

The bridging and commercial sectors accounted for 15% of all changes during September but searches remained consistent with the top three in both categories unchanged from the month before.

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Knowledge Bank founder and chief executive Nicola Firth says: “Mortgage brokers continue to work tirelessly to place their clients’ mortgages in the face of daily product and criteria changes at an unprecedented level and this month revealed some worrying changes.”

“Brokers searching for lenders who will accept borrowers with missed or late payments made the top five searches for the first time in six months in both residential and secured loan searches.”

“Additionally, there were other signs that borrowers are in a declining financial position as they look to add lenders fees to the loans and the popularity of searches for equity release products for properties with an annex suggest households are consolidating their living arrangements.”

By Becky Bellamy

Source: Mortgage Finance Gazette

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