Britain's financial stability is on the brink as mortgage borrowers are turning to brokers for help in managing their debts.
This is the warning from mortgage brokers, after the latest Knowledge Bank monthly criteria index has revealed search terms relaying to delayed or missed mortgage payments has burgeoned over May.
Nicola Firth, chief executive of Knowledge Bank, said: “As borrowers face the burden of increasing living expenses and often rising debts, many are crying out for help.
"Others are being hit especially hard if they are coming off a fixed rate mortgage at sub-2 per cent and facing the prospect of moving on to one that could be three times higher."
Other search terms suggested mortgage borrowers were seeking to extend their mortgage to the maximum possible age a borrower could be at the end of the term, while brokers have seen clients looking at extending their mortgage terms and even turn to equity release to help manage debts.
It is clear that some are trying every means possible to get on the housing ladder.Nicola Firth, Knowledge BankFirth said the monthly criteria index from Knowledge Bank highlighted the pressing financial difficulties for many in the UK, but with inflation still above target at 8.7 per cent and the Bank of England base rate rising once again, this is no surprise.
During the first quarter of 2023 there were over 280,000 searches on Knowledge Bank and over five million criteria searches have been carried out to date.
The table below shows that, over the past three months, there has been a noticeable surge in the trend for 'joint borrower, sole proprietor' mortgages.
Top five searches performed by brokers on Knowledge Bank during May 2023
| ||||
|---|---|---|---|---|
| RESIDENTIAL | BUY-TO-LET | SECOND CHARGES | EQUITY RELEASE | |
| 1 | Maximum Age at End of Term | Lending to Limited Companies | Maximum LTV / Loan To Value | Minimum Property Value |
| 2 | Missed or Late Payments | First Time Landlord | Lend in Scotland | Ex-Local Authority Houses |
| 3 | Joint Borrower Sole Proprietor | No Requirement to be a Homeowner | Mortgage or Secured Loan Arrears or Defaults | Maximum LTV / Loan To Value |
| 4 | Self Employed - 1 Years Accounts | Minimum Income - Interest Only / Part and Part Single Applicant | Debt Management Plan - Ongoing / Current | Maximum Age at Application |
| 5 | Employment - Time in Current Employment | Holiday Lets | Minimum Loan Amount | Individual Voluntary Arrangement - Ongoing / Current |
According to Firth, this is usually parents or grandparents helping their children get a foothold on the property ladder.
The data also highlighted the number of searches in the 'second charge' sector in particular, revealing a notable increase in people looking for answers to their financial challenges.
New search entries relate to customers looking for additional finance while having arrears or defaults. Additionally, there was a rise in searches for lenders who will accept people with a debt management plans.
This, alongside the number one search for ‘maximum LTV’ indicates that clients had been actively contacting brokers to help them manage their finances by securing them additional borrowing.
Firth added: "It is clear that some are trying every means possible to get on the housing ladder, from taking a ‘joint borrower, sole proprietor’ mortgage, to extending payments over a longer term and even looking at buying a rental property before their own home.
“The current economic climate and outlook, again point to the importance and value of mortgage brokers to help both existing and potential borrowers.
At the same time we can see just how challenging the market is for brokers, with the need to navigate complex requirements, ever-changing rates and complex criteria."
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