Affordability increased but fewer options available to mortgage borrowers

Fewer lenders have been able to provide the loan size requested by borrowers over the last six months, research from Mortgage Broker Tools (MBT) has revealed.

This is despite lenders increasing the average available maximum loan size in that time.

The latest MBT Affordability Index showed that June saw the average largest loan size available to customers sit at £243,250 – an increase of nearly 4% on January when it was £234,244. However, MBT 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.

MBT’s data revealed 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 – driven in some way 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.

Furthermore, MBT said the trend has also been reflected in loan affordability for home movers and the self-employed. The index revealed 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 climbed from 221,400 to £233,300, while the percentage of affordable lenders has fallen from 71% to 69%.

MBT CEO, Tanya Toumadj, said: “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.

“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.”

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