Interest only loans continued to attract strong attention from mortgage brokers and borrowers in August, according to the latest analysis released by criteria search specialist Knowledge Bank.

Having only entered the top five search terms for the first time in July, interest only mortgages were still the third most searched for criteria by intermediaries last month. This is despite separate figures from UK Finance showing that these type of loans actually fell by 13% last year.

Knowledge Bank said August’s result was likely due to brokers finding out which lenders would consider their interest only clients at the very start of the mortgage process. The company added that interest only loans were currently “a changing landscape”, with the UK financial regulator keen for products such as lifetime loans to be promoted as an alternative solution for borrowers who may end their mortgage term with no repayment vehicle in place.

The latest criteria activity index also revealed that ‘maximum age at end of term’ was the most popular search term for residential mortgages, followed by ‘self-employed – one year’s accounts’. However, ‘right to buy’ loans – which made their first appearance in the top five in July – dropped out of the index in August.

Meanwhile, in the bridging category, ‘regulated bridging’ once again topped the criteria index, while ‘maximum LTV for bridging’ fell into third place, behind ‘minimum loan’ amount. The fact that brokers have been searching for lenders that will loan a lower amount might indicate that borrowers are looking for bridging loans for smaller projects such as refurbishment, Knowledge Bank predicted, adding that the same search for ‘minimum loan’ amount also rose to second place in the commercial category, possibly for the same reason.

The Knowledge Bank search system holds more than 91,000 criteria from over 200 lenders, and registered almost 30,000 changes to mortgage lending criteria in the first half of 2019.

Knowledge Bank CEO Nicola Firth said: “We are entering an unprecedented period of change in the country, both politically and economically. The mortgage sector has never been more fluid and we can see from these results that product types rise and fall in popularity from month to month. As a result, keeping up to date with products and their accompanying criteria has never been more challenging.”

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