Legal & General: searches for capital-raising mortgages surge in popularity in April
Legal & General SmartrFit Tool reveals that searches for capital-raising mortgages surge in popularity in April.
Key points from analysis:
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- Searches for capital raising mortgages are trending upwards, moving from the sixth most popular search criteria in January to third place in April
- First-time buyers were the second most used search criteria, at a time when more buyers are relying on the Bank of Mum and Dad for funds
- Searches for smaller properties and lower-cost home ownership products also rose in April
London, April 2023 – Data from Legal & General’s SmartrFit tool has today revealed that searches for capital raising mortgage have been trending upwards in recent months, suggesting more borrowers are considering their financial options during the ongoing cost of living crisis.
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- Capital raising finally surging:
‘Capital raising’ has been identified as the third most used search criteria by brokers in April. Capital raising mortgages allow homeowners to remortgage their property to release funds for other purposes. This search term has continuously grown in popularity during recent months, ranking as the sixth most popular term in January, then fifth in February and third in March.
This is perhaps an indication that more borrowers are looking to borrow against their property. Historically this extra borrowing has been used by many homeowners to finance home improvements.
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- First-time buyers push ahead with purchase plans:
‘First-time buyer’ was the second most used search criteria in April, retaining its position from the March data. There was also some indication that many first-time buyers are continuing to rely on the Bank of Mum and Dad to fund their purchase plans. Searches concerning guarantors and family assistance increased by 18%, while searches from those with deposits from a loan rose by 10%.
The fifth most commonly used criteria was ‘joint borrower, sole proprietor’, which likely gives first-time buyers full legal ownership of properties irrespective of the funds raised by Bank of Mum and Dad.
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- Down-sizing and good deals:
The data also suggests that more buyers may be opting for smaller properties amidst recent house price inflation squeezing budgets. Searches for ‘freehold/leasehold flats’ increased by 6%, while searches for ‘studio flats’ increased by 9%. This could be due to existing homeowners looking to downsize as a means to reduce outgoings and boost liquid assets.
Many aspiring buyers are clearly looking to get more for their money and searches for ‘Discounted Market Sale (DMS)’ products increased by 37% in April.
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- Visa’ remains at top spot:
The April data confirms that Visa remains the most popular search criteria used. This has held the top spot since October, suggesting the UK market remains an appealing destination for overseas borrowers.
Jodie White, Head of Mortgage Products & Transformation, said:
“This month’s figures are a great insight into the kinds of products that borrowers are currently looking for and the consistent rise in searches for capital raising mortgages is a clear example of how the market is continuing to evolve.
“New products and increasing innovation from lenders are giving buyers more choice, but they also mean that advice is even more valuable.
“Brokers are already playing a key role in this rapidly moving market and it’s more important now than ever that buyers can access the best possible financial advice.
“Of course, an increasingly complex market presents difficulties for brokers too, as they need to work harder to stay up to speed with the latest offerings.
“Finding the right tech products though can be a game-changer.
“A good tech solution can allow brokers to more quickly access a complete view of all the most suitable options at a client’s disposal.
“A one-stop platform that can offer comprehensive affordability checks and other services is a powerful tool in the adviser’s arsenal.”
Kindly shared by Legal & General
Main article photo courtesy of Pixabay
