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Furlough, footprints and freelancers made up key criteria in 2021 – Firth

by: Nicola Firth, founder and CEO of Knowledge Bank
  • 14/01/2022
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Furlough, footprints and freelancers made up key criteria in 2021 – Firth
The more things change, the more they stay the same. While 2021 has had a seismic shift in criteria with over 46,000 changes, some common themes have emerged throughout the year.


In the residential market, the year started with a focus on furlough. According to government figures, the scheme was supporting approximately four million people at the start of the year, and unsurprisingly, this was impacting brokers searches.

With restrictions in place from lenders, ‘furloughed workers’ was the most-searched term across the first-quarter of 2021 in the residential market. While the majority of lenders had strict restrictions and would only consider applicants once they had returned to work, some – like Atom Bank – would consider furlough income for product transfers.


Brokers treaded softly in Q2

Brokers were treading lightly with clients in the second quarter, furlough fell from the top spot in the most-searched terms in April and was replaced by ‘soft footprint at decision in principle (DIP) stage’.

This may be due to the initial stamp duty holiday which was driving urgency from borrowers, and in response some brokers may have applied to multiple lenders to ensure a speedy DIP. By using a soft-search the broker could ensure the borrower’s credit score was not negatively impacted for future applications.

Another factor that resulted in soft-searches was the requirement from most estate agents for a DIP to be in place before they would allow a buyer to view a house.

As we entered summer, and the weather began warming up, employment became a hot topic for brokers; more specifically, self-employment. ‘Self-employed with one year’s accounts’ was amongst the most-searched terms by brokers, as those who had set up their own company during the pandemic were looking to buy.

Similar to those on furlough, lenders implemented strict restrictive criteria for the self-employed, and this was particularly the case for those with just one year of accounts. Understandably with the impact of lockdowns and the pandemic, there were concerns about the stability of self-employed businesses’ income and therefore lenders were cautious in 2021.

Brokers were also searching for ‘time in current employment’ in June. The employment carousel began turning in the second quarter, as confidence began building in the economy. This may also be connected to people leaving the hospitality industry, as with restrictions still limiting business, some were looking to change sector.


Q3 brought a semblance of normality

The first half of 2021 was dominated by furlough and the self-employed struggles, and in the third quarter of the year searches returned to familiar pattern. ‘Maximum age at end of term’ was the most-searched term in July, August and September.

Before Covid-restrictions hit, over the past few years ‘maximum age at end of term’ had been the most popular search by brokers.

The main factors driving these searches include: an ageing population, employees working into later life, and increasing house prices causing borrowers to stretch mortgage terms.

Financial difficulties were also prevalent in broker searches in the second half of the year. ‘Defaults’ and ‘missed or late payments’ both featured regularly in the third quarter, with some struggling financially, potentially as a result of being on furlough.


Affordability an issue in Q4

House prices sky-rocketing over the year certainly impacted criteria searches, particularly towards the end of the year. ‘Income used for affordability’ was amongst the most-searched terms late in the year, perhaps unsurprising as wage growth has been considerably outstripped by the increases in property prices.

In November, the so-called ‘bank of mum and dad’ re-opened for business with brokers searching for ‘joint borrower sole proprietor’. Predominantly used by first-time buyers, these products allow the income, or a deposit from a close family member or friend, usually a parent, to be included on the mortgage, without them actually owning any of the property.

With the end of the stamp duty holiday reducing competition, and first-time buyers largely exempt from stamp duty anyway, many were looking to get a foot on the ladder late in the year.

Throughout the year lenders continued to adapt criteria, resulting in an unprecedented number of changes and searches.

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