Borrowers are turning to second charge mortgages to help alleviate financial issues, new analysis by Knowledge Bank has indicated.

The criteria search specialist revealed that “capital raising for debt consolidation” featured prominently in brokers’ searches in January, reflecting the rising costs of living.

Brokers were also searching for “mortgage or secured loan arrears or defaults”, demonstrating that those who had missed payments were also looking for a second charge product.

Against the backdrop of spiking energy and food prices, Knowledge Bank stated that broker searches in the second charge market were mirrored in the residential sector, with “defaults – registered in the last three years” entering the top five most-searched terms in January for the first time since September last year.

Alongside defaults, brokers were also searching for “time in current employment” in the residential sector, which was the second consecutive month that this has featured significantly in brokers’ searches. Knowledge Bank suggested this could indicate there are a number of employees new in position looking for property.

“While lockdowns appear to be a thing of the past, the economic impact of the pandemic is likely to continue impacting borrowers for years,” commented Knowledge Bank operations director, Matthew Corker. “The cost of living is rising significantly and some borrowers are turning to second charge products to help cope with the financial pressures.

“At the end of the furlough scheme there were a number of brokers searching for time in employment, and these searches have continued. Earlier in 2021 employees may have held off moving due to economic uncertainties, however it appears the jobs carousel is now in full swing.”

Furthermore, Knowledge Bank’s analysis showed that searches in the bridging market primarily focused on “regulated bridging” for the third consecutive month. According to the data, regulated bridging is now consistently in the top two and has been for 18 months. Brokers with bridging clients were also looking for “minimum property value”.

“Regulated bridging remains a popular search by brokers as some property owners use bridging loans to make improvements to their own homes,” Corker added. “The searches for minimum property values suggests borrowers are looking at properties in cheaper parts of the UK, or considering a property in need of renovation.”

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