The mortgage market flattens out as the consultants’ search activity

The latest mortgage search data from the Legal & General Mortgage Club (L&G) shows signs that the market is beginning to normalize.

According to L & G’s SmartrCriteria tool, searches for vacation-friendly mortgages fell 32% – the second consecutive monthly decrease, after a 40% decrease between March and April.

The search volume for mortgages suitable for borrowers with unsatisfied defaults also continued to decline (2%) and the demand for mortgages for borrowers with unsecured arrears remained stable compared to the previous month.

General search activity also continued to return to more normal levels, having declined 20% in May from its March peak.

Fast debt restructuring trends

Legal & General’s tool also followed a growing trend towards rapid debt restructuring. Search queries on behalf of homeowners who wanted to reschedule after less than six months increased by two-fifths (40%).

The club says mortgage lenders usually need to understand why a property might have changed hands or had to be rescheduled in such a short period of time to prevent money laundering, for example.

It’s unclear what is driving the trend, but the current strong home price inflation could see some people who have recently bought benefit from the recent months’ home price hikes through sales soon after their purchase, L&G says.

Others could use the extra equity in their homes to gain access to the cheaper interest rates available at lower LTVs.

Other important findings

  • With the record growth in property prices, SmartrCriteria also saw a significant increase in the search for mortgages to raise capital. The demand for these products increased by 26% between April and May

  • The search for visa-friendly mortgages remained the top advisor by volume, suggesting that foreign buyers’ interest in UK property remains strong

  • Mortgages suitable for borrowers with satisfied defaults remained among the top three most sought-after criteria, suggesting that the massive use of mortgage deferrals is having a lasting impact on mortgage buying trends

Clare Beardmore, Head of Mortgage Transformation and Operations at L&G, comments, “The mortgage market has been on a roller coaster ride in the past few months, with demand reaching unprecedented levels between January and March.”

“However, we are now seeing the first signs that things may be getting ‘normal’ again, with search activities more similar to pre-pandemic conditions.”

She adds: “Of course, many will feel the financial consequences of the crisis for a long time to come, and the key for mortgage borrowers is to continue to seek advice from mortgage advice when it comes to finding a new mortgage.”

“Using cutting edge technology, consultants have done an excellent job finding the right options for homeowners across the country, and we can expect this trend to continue with the many thousands to refinance through to the end of the year. ”

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