MBT Affordability Insights: New year, new headaches

Two ways of doing this include restricting maximum LTVs and class of income. For example, self-employed clients are now restricted to 4.49 times income by Halifax and can only borrow up to 60% LTV with Santander. These are just two examples and there are many smaller changes behind the scenes.

The options for self-employed clients are changing particularly quickly. In December, no lender was able to meet the loan amount requested by the customer on 25% of self-employed cases, compared to 20% of employed clients. So far, in the first half of January, the percentage of self-employed cases where no lender can meet the affordability requirements has already risen to 30%.

On those cases where no lender is able to meet the loan requested, the gap between the highest amount offered and the requested loan was 22% for self-employed clients in December, but only 17% for employed customers. And, on average self-employed clients are being offered lower loan amounts. In December the average minimum and maximum range for self-employed clients was between £115k and £223k. While, for employed customers it was between £150k and 250k.

So how can brokers keep up? The rate of change is particularly challenging where brokers have carried out initial affordability research for clients at the beginning of their property search, only to find the situation has changed significantly when they have found a property to buy.

The only way for brokers to ensure they are carrying out up-to-date accurate affordability research is by using an online affordability platform, like MBT Affordability. Not only do these platforms save brokers time by checking dozens of lender calculators from one form, but cases can also be saved and re-run, ensuring that clients are provided with the most up-to-date information at the point they are ready to proceed.

The new year has brought with it new headaches, but fortunately technology can help take the strain.