Broker searches for interest-only mortgages jumped by more than half last month as borrowers looked to reduce their monthly costs, according to Legal & General’s Ignite platform.
The hub says this was the most common search term in June increasing by 53% over the previous month.
It says: “This highlights that borrowers could be looking to reduce their monthly costs for a period of time before switching back to a capital repayment mortgage if rates become more favourable.”
The platform points out there was also a 40% increase in searches for Help to Buy, even though the deadline for the government scheme closed on 31 May.
It says: “There is a strong demand for similar government-backed schemes to tackle affordability issues.”
The hub adds there was increased demand from first-time buyers last month, “despite ongoing economic volatility, however, affordability still remains the key barrier to their homeownership aspirations.”
It points out that there was a 14% lift for searches on behalf of FTBs in June, while searches in relation to affordability also increased by 21%. Searches in relation to minimum income requirements also increased by 17%.
L&G says: “These increases point to a resilience in the market and among first-time buyers, however, more must be done to address affordability issues for the demographic.”
The platform adds that the private rental sector “continues to bolster mortgage market activity”.
It says there was a 32% increase in enquiries for multi-unit freehold blocks and a 38% increase in searches for rental income, which “highlights that landlords are a key driver in the market”.
It adds: “These buyers could be looking to maximise rental income, as rents across the UK continue to rise.”
Also, enquiries for top slicing rose by 49% in June, while searches in relation to regulated buy-to-let increased by 15%.
The platform adds that searches for several other property types also increased in June. Enquiries in relation to right to buy and right to acquire, increased by 17% last month, while searches regarding ex-local authority properties jumped by 29%.
Under current legislation, a property bought under the right-to-buy scheme, could see a buyer get a 35% discount on its market value if they have been a public sector tenant for between three and five years.
The platform adds that “overseas buyers also continue to invest in the UK property market and are helping to bolster its growth”.
Searches on behalf of overseas customers lifted by 16%, while enquiries on behalf of customers with a permanent right to reside or indefinite leave to remain jumped by 38%.
Legal & General Technology head of mortgage products & transformation Jodie White says: “It’s clear that the mortgage market remains robust despite ongoing issues with affordability, rising interest rates and stubborn inflation.
“It’s positive to see that market activity is still being driven by specific sectors including buy-to-let, overseas buyers, and by increased demand for particular property types.”
