Searches for interest-only mortgages have made a comeback in July, following the introduction of the mortgage charter and the fourteenth consecutive rise in the Bank of England’s (BoE’s) base rate, Knowledge Bank’s July criteria index has found.

The results were expected following a drop in inflation.

However, what is less clear is whether there is an uplift in ISAs or endowment policies to pay these mortgages off. Knowledge Bank has said that during the current cost of living crisis, perhaps there is not. In which case, looking for a switch bank to capital and repayment mortgages in a few months’ time after the six-month hiatus allowed by the mortgage charter may be the best option.

July also saw a new entry in the top five searches. ‘Joint borrower, sole proprietor’ was recorded in these popular searches, becoming a key search term for brokers once again. This policy enables parents and other people to guarantor a mortgage, often of younger family members, whilst avoiding the additional stamp duty incurred by being on the house deeds for a second property.

This search also joins the persistent trends of ‘missed or late payments’ and ‘maximum age at end of term’, which have been the top two, highest trending residential searches throughout 2023. This demonstrates the ongoing pressure that many are under to meet their mortgage payments, which is clearly prompting brokers to explore ways to ease the burden on their clients and provide greater financial flexibility.

There is increasing evidence that many people are extending their mortgage terms to make their monthly payments more manageable, which again will increase with the introduction of the mortgage charter. The search for new loans that will accept people with ‘missed or late payments’ also backs up recent figures from UK Finance that arrears are on the rise.

Knowledge Bank CEO, Nicola Firth, said: “Brokers finding creative solutions for residential borrowers is definitely a theme, with many borrowers desperately seeking assistance with their mortgage terms and payment structures. Others, not put off by these challenges are still exploring ways to buy their first property, be it with family support or by trying to buy a rental instead to give them a foot on the housing ladder. A growing number of brokers are wisely using criteria search to identify lenders capable of offering the required lending solutions.

“Despite ongoing economic shifts, searches show how brokers demonstrate commendable care and caution when advising vulnerable applicants seeking solutions. This thoughtful approach speaks to their dedication to safeguarding their clients from potential challenges in an unpredictable market.

“In the month that saw the launch of Consumer Duty, the key role of brokers in assisting both existing and prospective borrowers has never been more important.”

Share Story: