Searches for lenders accepting applicants with “missed or overdue payments” entered the top five searches on Knowledge Bank’s specialist platform last month, which it calls a “potentially worrying development”.
The criteria-tracking firm says the increased use of this type of research follows rising interest rates, inflation and the cost of living, which has led to higher food bills and energy.
The Bank of England’s Monetary Policy Committee has raised its key rate four times since December to 1%.
Inflation hit 9% in April, a 40-year high. The Bank has warned of the possibility of a recession and expects inflation to top 10% by the end of the year, not seen since 1982.
Knowledge Bank chief executive Nicola Firth said: “With rising interest rates and household bills accounting for a growing share of household income, affordability looks set to be affected and lenders will be obliged to adapt the criteria accordingly.
“Lenders are very aware that household incomes are affected by the rising cost of living and are therefore likely to adjust their criteria to ensure a high level of responsible lending.”
The most used residential loan search by brokers in May was, as in the previous three months, “maximum age at end of term” as borrowers look to extend the term of their mortgage.
Also in the home loans category, the search for “self-employed with a year’s worth of accounts” jumped to second place after only entering the top five last month.
The buy-to-let sector saw ‘first home owners’ looking for a lender top searches for the third month in a row, followed closely in second place by brokers looking for lenders to buy for hire who will consider lending to limited companies.
The most common search for customers with transition needs remained the same last month, with “regulated transition” taking the top spot, followed closely by “minimum loan amount” and “maximum loan vs. value “.
The criteria tracker says: “As with the commercial sector, activity in the bridge sector remained robust throughout May, with the number of broker searches increasing month on month.”
The commercial sector saw a new entrant to its top five searches last month as brokers searched for lenders who would consider “part commercial mixed-use properties”. This search returned to the top five for the first time since January.
Firth of Knowledge Bank adds: “As interest and mortgage rates are expected to rise throughout the year, there is increasing pressure on brokers to secure a product for their client while rates are still affordable.
“Additionally, with reports of low housing stock on the market, competition for homes is fierce and so buyers really need their mortgage offer locked and loaded so they can act quickly to secure their dream property.
“As the rush for the last remaining low rates heats up, brokers can avoid wasting time in the application process simply by checking criteria conditions before a product search.”