There was a significant increase in the number of advisers searching for criteria around interest-only mortgages between April and May, according to new data from Legal & General Mortgage Club.
Data from the club’s SmartrCriteria tool, which helps advisers to quickly determine whether a lender would consider a mortgage application from their client, showed that the criteria search combination for interest-only, maximum age for interest-only and minimum income was the third most searched for topic last month.
Loan-to-value and mortgages for people who had defaulted in the past made up the top two searches by advisers.
In April, the data showed that searches for interest-only were just sixth in the list of most popular searches on Legal & General Mortgage Club’s tool. The club suggested that rises in adviser searches in May will have been influenced by the reopening of the housing market, but data from SmartrCriteria also showed that weekly searches for interest-only product criteria were already starting to rise before lockdown eased.
While there were few enquiries for interest-only in the first week of April, searches for these products had moved to be the third highest search by advisers in the first week of May. The mortgage club implied that advisers have been suggesting these products as an alternative solution for clients facing difficulties resulting from COVID-19.
Legal & General Mortgage Club director, Kevin Roberts, commented: “Coronavirus has clearly impacted many homeowners’ finances. Millions have been furloughed while others face significant disruption to their businesses – as a result one in seven borrowers has taken the decision to defer their mortgage repayments.
“For many, these payment holidays will be a lifeline, but they are not the only solution for borrowers and in many instances there will be alternative options that are more appropriate for their circumstances.
“This is exactly where mortgage advisers can and are playing a critical role for borrowers, guiding and supporting them to make the best decisions for their needs and plans. Our data shows that advisers are already thinking outside the box and searching for new options for borrowers who are on or considering payment holidays, that can help them to manage their monthly mortgage repayments.”
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