Mortgages 

Borrowers increasingly uncertain on lending criteria

Borrowers increasingly uncertain on lending criteria

Borrowers are increasingly uncertain they satisfy lending requirements due to ever changing criteria from lenders, new data has suggested.

Knowledge Bank reported a continued stream of broker search activity on its mortgage criteria database in August, despite it traditionally featuring as a quiet month. 

Nicola Firth, chief executive at Knowledge Bank, said feedback from brokers over the past month had suggested increased levels of uncertainty among borrowers about the products on offer and their ability to qualify for them.

This was exacerbated by the Bank of England's recent decision to raise the base rate from 0.5 per cent to 0.75 per cent, she said.

Ms Firth said: "Coupled to this is evidence of a raft of lenders tweaking and refining their criteria in tandem with price changes as a result of what is only the second base rate rise in over a decade."

In its latest criteria activity tracker, Knowledge Bank identified the most popular criteria searched within the residential mortgage sector as "joint borrower sole proprietor" - suggesting searches for a ‘Bank of Mum and Dad’ criteria featured heavily in broker requirements.

Other top searches in the residential sector included the maximum age allowed at the end of the term, maximum loan-to-value and a search for lenders allowing capital raising for debt consolidation.

Within the buy-to-let sector, searches for lenders who accept first time landlords hit the top spot for the first time, despite hints the overall market was shrinking.

Landlords have been hit by higher taxes and tougher affordability rules in the past couple of years, which has led to many smaller landlords pulling out, according to a recent survey from the Royal Institution of Chartered Surveyors.

rachel.addison@ft.com

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