COVID-19 dominates Knowledge Bank May criteria tracker

COVID-19 continued to dominate the attention of brokers during May, with ‘COVID-19: Temporary Maximum LTV Restrictions’ featuring prominently across four of the seven categories recorded by Knowledge Bank’s criteria tracker.

The criteria search specialist suggested this echoed results in the previous month and reflects the ongoing limits placed on LTVs by many lenders in the wake of the coronavirus pandemic.

In the residential market, the criteria tracker showed this was supplemented by a strong showing from ‘COVID-19: Furloughed Workers’, which moved up from third position in April, to second in May. Knowledge Bank suggested this reflected furloughed workers finding themselves in complicated circumstances in terms of securing mortgage finance, and that many with existing mortgages will be looking to review their situation.

The data also showed indications, however, that the immediate impact of coronavirus on the market had begun to recede. In April, Knowledge Bank revealed that brokers also searched in large numbers for ‘Internal/AVM/Desktop Valuations’ in the residential and buy-to-let (BTL) markets, but this term did not feature in the top five the latest tracker.

Knowledge Bank said that lenders have adapted and embraced alternative valuation methods, while the announcement in the middle of May that physical valuations could resume has prompted a move to reintroduce higher LTVs.

The equity release market showed the greatest volatility in Knowledge Bank’s tracker again, with all of the top five broker searches changing between April and May. Each of the three leading search terms – ‘Married Couple Application in One/Single Name’, ‘Flat Roofs’ and ‘Lodger/Boarder/Rent a Room’ – had previously featured in the top five just once in the two years the tracker has been running. The criteria search expert suggested this meant equity release is attracting a wider range of prospective borrowers.

Knowledge Bank lender relationship manager, Matthew Corker, commented: “The market is clearly going through a seismic change, with both lenders’ criteria and borrowers’ circumstances undergoing rapid shifts.

“As the ‘new normal’ begins to take shape, brokers are going to need to have their wits about them – and make use of all the tools they have available – to keep pace with the changes, and continue to provide their clients with the best possible service.”

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