Following the launch of the tool, which allows individual’s to calculate their personal inflation levels by inputting typical expenditure patterns into the web tool, suggestions have been made that some lenders may use individual inflationary numbers to calculate future loan levels.
Currently, lenders using affordability calculators incorporate an average inflationary figure to allow for future fluctuations in consumer expenditure. For example, a young 20 something may spend more money on socialising and shopping than an elderly person who stays at home all day using energy resources. This would give the former a lower inflationary figure, which could then be factored into any decision made by lenders.
Matt Grayson, head of PR at BM Solutions, said the introduction was interesting and hinted that the lender would consider using the model in the future. He said : “BM Solutions is always looking at ways to make even more detailed lending decisions based on an individual's specific circumstances. The personal inflation calculator is an interesting development which we're looking at closely,”
However, Paul Hunt, head of marketing at Platform, dismissed the use of personal inflationary figures in future lending decisions. He said: “This is an interesting guide for consumers but it will not affect affordability calculators from a lending perspective. Within affordability calculators an allowance is made for fluctuations in interest rates, which is sufficient to cover an increase or decrease in the market.”
