“Even as lenders relax restrictions and offer larger loans, borrowers have a harder time getting the loan amount they need.”
In the past six months, fewer mortgage lenders have been able to provide the loan amount requested by borrowers, although lenders have increased the average maximum amount available for loans.
Analysis of cases handled through Mortgage Broker Tools (MBT) shows that in June of this year the average largest loan amount available to customers was £ 243,250, an increase of almost 4% from to January when it was £ 234,244. However, the percentage of lenders who were able to honor the loan amount requested by a borrower fell from 80% in January to 73% in June.
The difference is even greater for first-time buyers. In January, the average largest loan amount available to a first-time buyer was £ 230,555, up more than 13% to £ 261,290. This has, in a way, been motivated by the increasing number of options at higher LTVs. However, while 86% of lenders were able to honor the loan requested by first-time buyers in January, it fell to 72% in June.
This trend has also been reflected in the affordability of loans for movers and the self-employed. The MBT Accessibility Index shows that the average size of the largest loans available to movers has increased from £ 285,860 in January to £ 292,149 in June, while the percentage of lenders able to meet the requested loan amount went from 82% to 74%. Likewise, for the self-employed, the average highest loan amount available increased from £ 221,400 to £ 233,300, while the percentage of affordable lenders increased from 71% to 69%.
Tanya Toumadj, CEO of Mortgage Broker Tools, said: “The latest edition of the MBT Affordability Index highlighted a very interesting trend. Even as lenders ease restrictions and offer larger loans, borrowers are struggling to get the loan amount they need and we are seeing fewer lender options available than at the start of the year. Just because borrowers are asking for more – the average loan size has not changed. So what is going on?
“As we emerge from the pandemic and lenders change their criteria and their risk appetite, we are seeing an increasingly diverse approach to affordability calculations and that means borrowers, with their own set of circumstances, are able to obtain very different loan sizes from one lender to another. The good news is that the average maximum loan available is higher now than at the start of the year, and as the number of affordable lenders shrinks, there are still plenty of affordable options – if you know where to look. “