Following a report by the Council of Mortgage Lenders (CML), which revealed that housing affordability had reached an all-time low with the average first-time buyer (FTB) needing to borrow 3.37 times their income to buy a property, the CML revealed that the non-conforming market had increased by 28 per cent over the past year. A total of £24.6 billion had been loaned, with debt and non-conforming continuing to expand at nearly twice the rate of the traditional mortgage.
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The CML also revealed that 19.1 per cent of a FTB’s income was taken by mortgage interest payments, with the average second-time buyer borrowing 3.03 times their income during May. However, the report warned that the UK non-conforming market was itself at risk from defaulting payments.
Maya Imberg, author of the report, said: “There remains significant opportunity in the UK non-conforming mortgage market, however, growth is slowing.
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With more defaulting or meeting payments late, more consumers will fall into the non-conforming population. Despite the argument that they have sophisticated underwriting models in place, UK non-conforming lenders should take the US non-conforming mortgage crisis as a warning.”
Tamsin Hemsley, PR manager at Nationwide, said: “With rates rising and borrowers’ income becoming more stretched, it has never been more important for lenders to ensure that applicants are able to repay. It is in nobody’s interest for debt to increase and for borrowers to struggle with repayments.”
