"Appetite for risk contracts amid the uncertain economic environment"
Mortgage lenders are restricting the maximum loan sizes available to higher income earners, the latest Mortgage Broker Tools (MBT) Affordability Index has revealed.
According to the broker research platform, its data showed that the maximum average loan size offered by mortgage lenders to applicants earning a household annual income of more than £100,000 fell to just over £657,000 in July, which is down from more than £670,000 in March.
This £13,000 difference compares to much smaller reductions of less than £2,000 in the average maximum loan size available to households earning smaller incomes over the same period.
MBT earlier reported that mortgage affordability had dropped to its lowest level in 2022, with the average minimum and maximum loan size offered by mortgage lenders both decreasing.
Read more: Mortgage affordability plunges to lowest level in 2022.
“The cost-of-living crisis is impacting everyone, and we have already highlighted the disproportionate impact it can have on borrowers on lower incomes, whose disposable income is more significantly impacted by the rising prices of running a household,” Tanya Toumadj (pictured), chief executive at Mortgage Broker Tools, said. “However, this data indicates that mortgage lenders are also restricting their appetite for lending large amounts to households on higher income levels, as appetite for risk contracts amid the uncertain economic environment.
“This means that it is harder for borrowers to secure the loan size they want, whatever their circumstances, but there are still options. Our data shows that 90% of mortgage enquiries for higher earners are still considered affordable by at least one lender, while this figure for all enquiries has remained consistent at 76%.”
Toumadj added that the key in securing the right mortgage is for brokers to research a wide panel of lenders to ensure they maximise their opportunity to secure the most suitable deal for their clients.
