As the mortgage market continues to evolve, brokers are encountering increasingly complex cases, with recent data from Knowledge Bank highlighting a notable uptick in searches related to adverse credit and specialist buy-to-let scenarios.
Brokers are reporting a surge in clients with challenging credit histories. Key areas with increased search activity include unsatisfied County Court Judgements, mobile phone arrears, and defaults exceeding £500.
These trends suggest that brokers are seeking lenders willing to consider applicants with complex credit profiles. The platform had seen these criteria ease in Q4 2024, and that had left many feeling optimistic that the worst of the cost-of-living crisis was over. These results say otherwise. Mobile phone arrears is often the start of the problem and the payment that borrowers feel they can recover quickest form falling behind on.
Buy-to-let market shows resilience
Despite broader market uncertainties, the buy-to-let sector exhibits signs of vitality. Notably, there has been a significant increase in searches for student let properties and unencumbered properties.
The latter indicates that landlords owning properties outright are actively exploring new investment opportunities, signalling confidence in the market's prospects.
While specific figures on unencumbered properties owned within the PRS are not readily available, the heightened search activity suggests a growing interest among landlords in leveraging equity-rich assets for further investment. The tightening regulation and shrinking profits, mean landlords are forced to act on those properties they previously sat on. Knowledge Bank is seeing an increase in bridging searches and development criteria too, suggesting that more landlords looking to develop and grow portfolios.
The data also shows that the demand for student housing continues to outpace supply. According to Knight Frank, the UK faces a shortfall of approximately 580,000 student beds, exacerbated by a slowdown in new developments. This gap presents opportunities for private landlords to cater to this underserved market segment.
Will Rhind, VP of advice and growth at Habito, commented: “We’re certainly seeing the same trends reflected in the market right now. Cases involving credit issues, like mobile phone arrears or small defaults, are cropping up far more regularly, and clients are often unsure where they stand. The encouraging news is that more lenders are now taking a pragmatic view, often overlooking missed payments on communications and utilities, which means there are still plenty of options available for customers with imperfect credit histories.
"On the buy-to-let side, landlord appetite hasn’t disappeared, it’s shifted. Investors are becoming more strategic, with unencumbered properties, student lets, and increasingly, holiday lets featuring more prominently in conversations we’re having at Habito. It’s a clear sign landlords are actively seeking ways to maximise yield and future-proof their portfolios in a changing market."
