It is becoming increasingly hard for brokers to balance the progressively varied demands of their clients with the lending restrictions of lenders that change on a daily basis.
It is worth noting that, on average, customers are asking brokers to take into account five different criteria, when searching for lenders to accept their application.
To date there have been over a million criteria searches on our system.
In the residential market, during the whole of 2019 there was only one occasion where the top five most searched-for criteria remained the same for two consecutive months.
This gives some insight to the job brokers have in keeping track of criteria demands and point to a mortgage market that remains in a constant state of change and innovation.
Most popular searches
The most consistently popular search in residential mortgages last year was for the maximum age a borrower could be at the end of the mortgage term. This was regularly ranked in the top two places every month.
As we look at our aging population, increased life expectancy and the lack of opportunity or willingness to downsize, borrowers are looking to extend the life of their mortgage as much as possible and expect brokers to find them a lender who will support this.
In second place was the search for lenders offering loans to the self-employed, which is unsurprising as government statistics report that in 2019 the number of self-employed people rose to 4.93 million, some 125,000 more than a year earlier.
This market continues to be thought of as niche but with almost one in six working people self-employed this is a sector that mortgage lenders ignore at their peril.
Taking the third spot was clients wishing for their mortgages to be on an interest-only basis.
Despite a decade of low interest rates, anecdotal evidence suggests that borrowers continue to focus on reducing their monthly mortgage payment, some because they plan to use one of the many equity release products in the future and others because of necessity.
Lenders using criteria to differentiate
During 2019 lenders started using criteria as a sophisticated product differentiator in the same way they had traditionally used rate and LTV.
However, unlike these rather blunt tools that were all encompassing across a product range, tweaks to criteria i.e. the person you would accept rather than the product you would offer is a sophisticated and precise way for lenders to continually manage the profile of their loan book.
For brokers the additional headache that this constant change creates is of course the requirement and necessity to record and store the evidence of the options available to clients as they were at the point of application. It won’t help your cause to try to convince the FCA that you placed your client with a particular lender based on criteria that was changed a week later without proof.