Back in November, the Chancellor Rishi Sunak further extended the furlough scheme to provide additional support for a variety of businesses and individuals. While this remains a largely positive and vital solution, it has also introduced an extra layer of complexity within the mortgage lending community.
This is obviously something lenders and intermediaries have been dealing with for many months now. However, as time passes by, demand from borrowers on the furlough scheme appears to be increasing. Recent data from Legal & General Mortgage Club highlighted that searches for mortgage products suitable for furloughed borrowers increased by 230% between October and November.
In October, Legal & General’s SmartrCriteria tool, which helps advisers quickly determine which lenders would consider a particular mortgage applicant, recorded 175 searches for furlough-friendly products. A figure which subsequently increased by 230% to 577 searches in November.
In addition, the latest figures from Knowledge Bank showed that ‘furloughed workers’ reappeared in November’s top five most searched terms by brokers in the residential mortgage market. It also outlined just how quickly lenders reacted, with over 30 updates to criteria in just two days recorded by Knowledge Bank in its ‘furloughed workers’ category. Unfortunately for borrowers, most lenders tightened criteria for those who had been furloughed at any time, making it harder for them to buy or remortgage.
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Kevin Roberts, director of Legal & General Mortgage Club said: “Furloughed workers still need access to mortgage products and they shouldn’t assume that their circumstances mean they are locked out of the mortgage market.” I couldn’t agree more with these sentiments and it really does underline the value of good, professional impartial advice. It’s also vital for intermediaries to be aware of the types of solutions which are out there for clients who may have been forced onto the furlough scheme.
BDMs and lending support teams – backed by personalised underwriting routes – can play such an important role in being able to outline lending capabilities for intermediary partners and their clients.
We look forward to supporting you with these clients throughout 2021.
