The latest Knowledge Bank criteria activity index found brokers in the residential market were searching for ‘joint borrower sole proprietor’ (JBSP) mortgages. These are typically parents or close family who take responsibility for payment of mortgage but have no ownership of the property; this effectively increases the amount an applicant can borrow without the need for the home purchaser to pay the additional stamp duty required if an existing home owner is on the deeds.
The increase in searches may be attributed to the end of the stamp duty holiday, with first-time buyers, who are largely exempt from stamp duty, now looking to capitalise on the reduced competition for new homes.
This was the first time since January 2021 that JBSP has featured in the five most-searched terms in the residential market. The need for a JBSP becomes increasingly urgent as house prices continue to rise, causing issues of affordability, particularly for younger borrowers. Including a parent or relative’s income on the application can therefore allow the borrower to be eligible for a larger loan.
Despite some landlords’ concerns around impending EPC rating legislation, there still appears to be a strong number of borrowers looking to purchase a rental property in November and using second charge mortgages to do so. This resulted in ‘capital raising – purchase a buy-to-let’ featuring in the five most-searched terms in November for the first time since March.
Matthew Corker, operations director at Knowledge Bank explained:
“From the level of searches in November, it is clear that a rising number of parents and close family members are giving their loved ones a leg up onto the property ladder.
“With house prices still rising, affordability is still an issue for lots of borrowers, particularly those with only one income, so a JBSP product can support these buyers onto the market.
“In the rental sector, a recent survey by The Mortgage Works found over half of landlords with EPC D or below rated properties were considering exiting the buy-to-let market as a result of the new proposed EPC regulations. However, searches in the second charge market show there is still plenty of people looking to invest in the security of UK housing.
“Although sometimes viewed as a niche area of the market, there is a significant number of borrowers interested in smaller bridging loans. These smaller projects may include light renovations before selling, or exiting onto a buy-to-let product.
“As we move towards the end of the year, criteria shifts are still coming thick and fast and we look set for a record number of changes in the year. With this trend certain to continue, brokers need to ensure they are using a criteria search system so they stay up-to-date with all the latest changes.”
