12 Jun 2020
Legal & General Mortgage Club has revealed new data which shows a significant increase in advisers searching for criteria around interest-only mortgages between April and May 2020. Data from the SmartrCriteria tool, which helps advisers to quickly determine whether a particular lender would consider a mortgage application from their client, shows that the criteria search combination for interest-only, maximum age for interest-only and minimum income was the third most searched for topic on the tool 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 searches for interest-only were just sixth in the list of most popular searches on Legal & General Mortgage Club’s tool. While rises in adviser searches in May will have been influenced by the reopening of the housing market, data from SmartrCriteria also shows that weekly searches for interest-only product criteria were already starting to rise before the lockdown eased. Although there were just a few enquiries for interest-only in the first week of April, searches for these products had moved to be the 3rd highest search by advisers in the first week of May. This could suggest that advisers have been suggesting these products as an alternative solution for clients facing difficulties as a result of the impact of COVID-19.
The data from SmartrCriteria also showed that searches of mortgages for customers who had experienced a default in the past had risen sharply a well, more than doubling between April and May 2020. Adviser searches for options for customers with CCJs or debt management plans had also seen rises over the same period, indicating that that the COVID-19 crisis could see the rise of a growing segment of borrowers who need the support of specialist lenders.
Kevin Roberts, Director, Legal & General Mortgage Club: "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."
Established in 1836, Legal & General is one of the UK's leading financial services groups and a major global investor, with £1.2 trillion in total assets under management1 of which 40% is international. We have a unique and highly synergistic business model, which continues to drive strong returns. Legal & General provides powerful asset origination and management capabilities directly to clients, which also underpin our leading retirement and protection solutions. We are a leading international player in Pension Risk Transfer, in UK and US life insurance, and in UK workplace pensions and retirement income. Our purpose is to improve the lives of our customers and create value for our shareholders. Through inclusive capitalism, we are investing in long-term assets, such as real estate and infrastructure, that can help build a better society for the future.
1Data as at 31 December 2023.