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Lenders tighten self-employed affordability – MBT

  • 22/03/2021
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Lenders tighten self-employed affordability – MBT
Mortgage lenders reduced the minimum and maximum loan amounts they offered to self-employed borrowers last month, according to data from Mortgage Broker Tools (MBT).


The number of self-employed mortgage applicants receiving at least one offer matching their affordability requirements also dipped in February.

The biggest change was the average minimum loan available, which fell by more than 18 per cent to £96,935 – reflecting a significant tightening of self-employed affordability criteria among some lenders, MBT said.

And the average maximum loan available to self-employed mortgage applicants dropped by just over two per cent to £216,000 in February.

This meant the spread between the average minimum available loan size and the average maximum available loan size widened to more than £119,000.

“For brokers who only try one or two lenders, this can give a false impression that their clients have no chance of achieving the loan size they require,” MBT added.

Meanwhile, just two-thirds of self-employed cases processed through MBT Affordability had at least one affordability option, down from 71 per cent in January.

Instead, 31 per cent of cases were deemed to be unaffordable based on the required loan amount and lenders were unable to lend on two per cent of cases.

However across the whole of the market, 79 per cent of cases were affordable in February, slightly down from the peak of 80 per cent in January.

And there was at least one lender able to meet the loan requirements of 86 per cent of first-time buyers, 84 per cent of remortgage customers and 81 per cent of home movers.


‘Complex affordability landscape’

Tanya Toumadj, CEO at Mortgage Broker Tools, said: “The self-employed continue to face a complex affordability landscape as more lenders tighten criteria for mortgage applicants in this group and the number of options reduces.

“However, it’s important to remember there was at least one affordable option for more than two thirds of self-employed cases processed through the MBT Affordability platform in February.

“The message here is that the choice of lender makes a big difference to the amount a self-employed mortgage applicant can borrow, so brokers need to make sure they are considering all of the affordability options to ensure they are providing their clients with the most suitable recommendations.”



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