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Homebuyers struggling with affordability restrictions – Knowledge Bank

  • 05/11/2020
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Homebuyers struggling with affordability restrictions – Knowledge Bank
Homebuyers are struggling with affordability and reassessing income multiples, search trends on Knowledge Bank suggest.


The criteria sourcing system reported that ‘income multiple used for affordability assessment’ is within broker’s top five searches in October, impacting mortgage markets across the board.

And for the sixth consecutive month ‘Covid-19: Temporary maximum LTV restrictions’ has been within the top five, as the pandemic remains a key feature of mortgage affordability.

However, top search was ‘maximum age at end of term’, as borrowers perhaps try to stretch the term to keep their payments as low as possible.

The top spot in the bridging market was ‘maximum LTV’, and in the second charge market, ‘Maximum LTV/Loan to Value’ was similarly in first place.

Lenders’ tightened criteria is clearly still a significant issue for people with smaller deposits and it shows that LTV restrictions are impacting borrowers and their ability to buy or remortgage, Knowledge Bank said.


Buy-to-let searches

In the buy-to-let market, “first time landlord” is in first place. This could signify struggling homebuyers exploring alternative options to get a foot onto the property ladder.

The affordability assessment is based on the potential rental income, perhaps providing an easier route to ownership.

Searches for ‘Property with Annex /Outbuildings /Land /Acreage’ took the top spot in the equity release market once again.

This trend has undoubtedly been boosted by coronavirus impacting consumer habits, Knowledge Bank said, as fears over affordability are driving people to consider buying property with relatives.

Matthew Corker, lender relationship manager at Knowledge Bank, added: “The bottom line here is that people are desperately looking to get onto the property ladder.

“While there is much news about lenders returning to the market and introducing new products, we are already seeing signs that some products may be pulled in light of the second national lockdown as lender appetite for risk is reduced.

“The unknown impact of a second national lockdown on employment and the wider economy is causing panic in the housing market and this is putting buyers under an increasing amount of stress.”

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