Analysis by Mortgage Broker Tools (MBT) showed that currently three quarters of mortgage enquiries have options where the loan size requested is considered affordable.
However, the firm said that this could contract to 65 per cent as rising energy costs are included in lender’s affordability calculators.
The company added that Ofgem’s announcement that annual energy bills could rise by £1,578 for the average household could reduce the average loan size available to mortgage borrowers by £7,125.
MBT said that this could means thousands of prospective borrowers may not be able to access a loan size that would previously have been considered affordable.
Many to miss out on desired mortgage
Tanya Toumadj, CEO at MBT, said that the rising energy price was one of the “most significant factors contributing to inflation” and the additional costs need to be considered by lenders in their affordability assessments.
She said that analysis of its data, which is based on tens of thousands of mortgage enquiries, showed that increasing energy costs could “make a significant difference to mortgage affordability”, with 10 per cent of mortgage enquiries that would have been considered affordable missing out on loan size requested.
Toumadj continued: “The good news is that mortgage lenders are taking an increasingly data-driven approach to affordability, enabling them to offer loan sizes that are more appropriate to individual circumstances.
“Often the best lender for affordability may not be one of the first to be considered, so thorough research of the market is needed. For customers, the best way to do this is by speaking to a mortgage broker and, for brokers, the best way is to use technology to help them understand the available options from a wide selection of lenders.”
She said MBT Affordability had the largest panel in the market, which would maximise opportunity to secure a good deal for the client.
