According to analysis by Mortgage Broker Tools (MBT), one in five cases through its portal in January did not get offered the loan value requested as lenders are increasingly using affordability to regulate business volumes.
Its affordability index showed in 20 per cent of cases submitted no lender met the loan requested, with an average gap on these of £15,380 – eight per cent below the loan requested.
It noted this was indicative of the overall average maximum loan available to mortgage borrowers dropping to the lowest value it had recorded since launching a year ago.
This fell 12 per cent from a year ago to £234,224 and was a drop of nearly 14 per cent from its peak in September.
The biggest squeeze on affordability was for first-time buyers as the average maximum loan available to this group fell 13 per cent to £230,555 this January, compared to £264,411 a year earlier.
However, self-employed borrowers fared somewhat better than expected, although their maximum loan value remained below that of first-time buyers.
The average maximum loan offered to self-employed mortgage applicants was £221,400 in January – a fall of just over three per cent from its peak in August.
And perhaps surprisingly the minimum average loan available to the self-employed recovered to £118,800 – an increase of 45 per cent on its lowest point in April, and up 43 per cent on November.
Lenders making more adjustments
MBT CEO Tanya Toumadj (pictured) highlighted the increasing use of affordability tweaks by lenders.
“One of the trends we have noted in tracking affordability over the last year is that affordability has become a key lever for lenders in controlling business volumes,” she said.
“Traditionally rate has been changed by lenders as a means of growing or tempering lending levels, but increasingly lenders are also using criteria and affordability calculations.
“Through the second half of 2020, when customer demand was high and lender service was under pressure, we saw around three to five changes to affordability calculators every week.
“The record low maximum loan amount available in January reflects this ongoing dynamic and the mounting pressure on lenders as we approach the scheduled end of the stamp duty holiday.”
However, Toumadj noted brokers should not be disheartened as product choice was rebounding and now at its highest level since prior to the first lockdown.
“Our data shows there is a suitable affordability option for 80 per cent of all cases and so, while the average trends may be down, there are still lenders that want to, and are able to, lend the loan amount requested by most clients,” she added.