After a decade of so called "easy credit", the tightening of lending criteria over the last six months has had a lasting effect on the public. Perceptions of lending criteria and income multiples have worsened since Q1 2009, with the average income multiple currently being placed at just 3.1 times an individual's salary, which has dropped slightly compared to 3.2 times an individual's salary at the start of the year.
Despite some encouraging signs from lenders, there has been a shift in perceptions for the worse amongst the public - 33% of Brits now think they can only get between 0.5 times and 2.5 times their salary, compared 31% of Brits at the start of the year. Similarly, only 24% of Brits think they could borrow over 4 times their salary now, compared to 28% of Brits at the start of the year.
In reality, whilst lenders are still being more conservative than before, as a basic guide most lenders will now offer around 4 times an individual's annual income. Those looking for a mortgage also need to ensure they understand deposit sizes, as well as income multiples, as in the current market to get a good rate they will also need at least a 20% deposit.
Those living in Wales and the South East have shifted their perceptions of income multiples even further than the UK average since the beginning of the year. 32% of those living in Wales and the South West now believe they can only get a maximum of up to 2.5 times their income, compared to a lesser 28% at the start of the year. Similarly, only 25% of those living in Wales and the South West believe they can get 4 times or more their income now, compared to 33% of those at the start of the year.
