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Mortgage affordability falls to annual low as average loan sizes shrink – MBT

  • 01/09/2022
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Mortgage affordability falls to annual low as average loan sizes shrink – MBT
Mortgage affordability levels have fallen to their lowest this year as lenders have started to offer borrowers smaller mortgage loans on average, data has shown.

According to the Mortgage Broker Tools (MBT) affordability index, the minimum average loan size fell to £136,000 in July compared to £150,000 in January.  

The maximum average loan size lenders will offer has also decreased slightly from £274,000 in June to £270,000 in July. 

For borrowers requiring a high loan-to-income mortgage, just 22 lenders were affordable to them in July, a drop from 27 lender options two weeks earlier. MBT said this indicated mortgage lenders were tightening criteria for people borrowing against higher income multiples. 


“An interesting and turbulent time for mortgage affordability”

Tanya Toumadj (pictured), CEO at Mortgage Broker Tools, said: “Having watched house prices rise sharply, in addition to seeing the onset of an acute cost of living crisis, it might not be surprising that affordability is taking a hit. However, all of these factors are also likely to have a knock-on effect, with potential buyers struggling to afford to enter the property market, therefore lessening the high pressure created by recent surges in demand. 

“Experts across the market are predicting house price falls over the next two years, with Capital Economics suggesting as much as a 12 per cent drop in London, and some reports of down valuations emerging already as a result. However, there are contradicting reports that a downturn in the housing market will further reduce supply, which will help to underpin prices.” 

She added: “Whatever happens, there is little doubt that we are entering an interesting and turbulent time for mortgage affordability. As proven time and again throughout the unpredictable pandemic years, the answer to ensuring a client gets the best deal in a complex environment is comprehensive research and reliable data, backed up by technology.” 

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