Affordability inquiries – rise not as concerning as first feared

The majority of broker inquiries, during Q4 2022, were from consumers on the issue of mortgage affordability, according to PRIMIS Mortgage Network.

With the ongoing cost-of-living crisis, as well as higher mortgage rates following the mini budget last year, it seems unsurprising that the network found brokers reporting their clients were increasingly looking to financing options and ways to stretch their income.

The total number of inquiries also rose, with 7,642 queries over the last three months of 2022, up by 1,576 on the same period of the previous year.

However, one expert has said that despite the rise in mortgage affordability inquiries, this has not directly correlated to an increase in the number of customers negatively impacted by affordability issues.

Affordability inquiries – rise not as impactful as first feared

Scott Taylor-Barr (pictured), financial adviser at Carl Summers Financial Services, said although there had been a lot of talk about affordability issues, so far at least, he had not seen this impacting clients in the sort of numbers feared.

“Part of this is due to clients recalibrating what they feel is comfortable and affordable for them, while another aspect of it is that lenders are taking steps to mitigate the issues by tweaking their affordability models,” he said.

Taylor-Barr added that the third element to the rise in inquiries not directly correlating with an increase in the number of clients negatively impacted by affordability issues, is down to brokers having robust conversations with their clients around repayment terms.

Lewis Shaw, owner and mortgage broker at Riverside Mortgages, said in the aftermath of the mini budget, he had seen lenders batten down the hatches concerning affordability.

“However, some lenders have taken a rather conservative approach, and there is now a more considerable variability in affordability from lender to lender than at any time I can remember in the past five years,” he added.

That said, in the main, Shaw believes that the majority of people can still attain the mortgage they need.

Affordability inquiries – confidence returning

Aaron Forster, director at Create Finance, said that after the disastrous mini budget, lenders changed their affordability models as the cost-of-living rose, meaning lenders factored this into their calculators.

“The cost-of-living crisis was tracked by the Office for National Statistics (ONS), revealing significant increases, which led to lenders becoming very cautious with what income stretch they would do,” he said.

Forster said this also had a huge impact on buy-to-let affordability, and added that he received many queries from customers worried about this.

“Fast forward five months and confidence is back in the mortgage market; we have already seen several lenders now offering over five times income multiples, which means customers can again stretch their income further to meet their needs,” Forster said.

David Conway, director at Clayhall Financial Services, said, while confidence is slowly returning, brokers understand the mortgage market, and so are best placed to assist customers with affordability concerns.

“Brokers have access to systems that show the level of borrowing from any lender and, importantly, the cost of repayments; this takes just a few minutes and is invaluable,” he said.

Conway added that a consumer cannot obtain this information in any other way, so he believes brokers will hold substantial significance throughout 2023, as financial concerns are high.

“Using a broker can cut the time to get the mortgage deal you need quickly and reassuringly; brokers’ expertise cannot be replicated in a comparison site or anecdotally,” he added.

Have you encountered a rise in the number of affordability inquiries since the back end of last year? Let us know in the comments below.