Knowledge Bank: Soft footprint searches show “brokers treading carefully for clients”

Criteria search specialist Knowledge Bank has found that brokers are searching for applications that have a ‘soft footprint’, and will not leave a lasting mark on a client’s credit score, a trend it predicts may be reflected in completions in two or three months’ time.

In the residential market, ‘soft footprint at decision in principle (DIP) stage’ was the most searched term, showing the growing importance of a good credit record.

This follows the announcement in April that NatWest would no longer produce a hard footprint for agreements in principle (AIP).

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As purchases in the housing market become more competitive, house offers, or even viewings, are most likely to be accepted from those with an agreement in principle AIP or DIP.

This means brokers may be applying to a number of lenders at the same time to get a decision quickly, without it tarnishing their credit record.

It also could be due to brokers working with clients with low credit scores, concerned that a rejection would impact future applications.

April was the first month in 2021 that ‘furloughed workers’ was not the most searched criteria in the residential arena; although still in the top five, this suggests that brokers are either working with fewer clients on furlough, or that they now have a better understanding of the lenders that will lend to these borrowers.

The buy-to-let (BTL) market continues to garner interest, with ‘first-time landlord’ and ‘first-time buyer’ both featuring in the top five most searched criteria.

The UK rental market remains strong, with rents increasing across the country, with the notable exception of London, according to Rightmove.

‘Lending to limited companies’ has featured every month since the criteria index began in July 2018.

A new term featured in the five most searched terms in the equity release market is ‘medically enhanced lifetime mortgage’, marking the first time since April 2019 that this term has reached the top five.

These products are for those with medical conditions which give them shortened life expectancies. In these scenarios, lenders look to give lower rates or higher loan-to-values (LTVs) on equity release products.

In the bridging arena, ‘maximum loan to value’ and ‘regulated bridging’ were the top two searched terms, with the latter increasingly used as a result of buyers using bridging finance when a property chain has broken down, or to purchase a property at auction.

Matthew Corker, operations director at Knowledge Bank, said: “The soft footprint searches show brokers are treading carefully when making applications for clients.

“This might be as a result of the economic divide, with some clients struggling financially and wanting to avoid damaging their credit scores further.

“It may also be due to the increase in buyers rushing to buy a property, and looking to secure a mortgage in principle quickly so they can make firm offers.

“The two-speed rental market is gathering momentum with continued interest from new landlords and even those new to the property market completely.

“Those looking to invest will probably be looking outside of the capital as rents outside of London continue to increase rapidly.

“With criteria changes continuing at a rapid pace, brokers could spend hours every day searching for the latest criteria, so using a comprehensive criteria search system can save them a massive amount of time and ensure they are providing best advice.”