Lenders increase affordability but fewer options available to borrowers
09 July 2021
The MBT Affordability Index has revealed that over the last 6 months, fewer lenders have been able to provide the loan size requested by borrowers, despite lenders increasing the average available maximum loan size.
Analysis of real cases processed through Mortgage Broker Tools (MBT) shows that in June of this year, the average largest loan size available to customers was £243,250 – an increase of nearly 4% on January when it was £234,244. However, the percentage of lenders that were able to meet the loan amount requested by a borrower, fell from 80% in January to 73% in June.
The difference has been even greater for First Time Buyers. In January, the average largest loan size available to a First Time Buyer was £230,555, rising by more than 13% to £261,290. This has, in some way, been driven by the increasing number of options at higher LTVs. However, while 86% of lenders were able to meet the loan requested by First Time Buyers in January, this had dropped to 72% in June.
This trend has also been reflected in loan affordability for Home Movers and the Self-Employed. The MBT Affordability Index shows that the average largest loan size available to Home Movers rose from £285,860 in January to £292,149 in June, while the percentage of lenders able to meet the requested loan size dropped from 82% to 74%. Similarly, for the Self-Employed, the average largest loan size available had grown from 221,400 to £233,300, while the percentage of affordable lenders has fallen from 71% to 69%.
Tanya Toumadj, CEO at Mortgage Broker Tools, said:
“The latest edition of the MBT Affordability Index has thrown up a really interesting trend. Even though the lenders are loosening restrictions and offering larger loan sizes, borrowers are finding it harder to secure the loan size they require, and we’re seeing fewer lender options available than we did at the start of the year. This isn’t because borrowers are asking for more – the average requested loan size hasn’t changed. So, what’s happening?
“As we emerge from the pandemic and lenders evolve their criteria and risk appetite, we’re seeing an increasingly diverse approach to affordability calculations and this means borrowers, with their own unique set of circumstances, are able to secure very different loan sizes from one lender to the next. The good news is that the average maximum loan available is higher now than the start of the year and, while the number of affordable lenders is falling, there are still plenty of affordable options – if you know where to look.
“Comprehensive and accurate research can prove the difference between a mortgage enquiry successfully progressing to completion or falling at the first hurdle. And the easiest way to conduct whole of market research is by harnessing technology. Mortgage Broker Tools is the most extensive and reliable affordability research platform available in the market and we invite any broker who cares about securing the right result for their clients to make use of our 30-day free trial.”
