MBT Affordability Insights: Smaller lenders stepping up

Lenders have struggled to cope with this demand and have been using various tactics to stem the flow. The most obvious, of course, is to put up rates and there has been a huge increase in the cost of fixed rates over 80% LTV in recent weeks, which shows no signs of abating.

However, changes have been happening behind the scenes as well, with lenders tinkering with their affordability calculators and raising the bar on credit score thresholds, especially at higher LTVs.

Unlike rate rises, these changes are not immediately obvious and so brokers risk wasting a lot of time pursuing lenders for clients that will prove to be unsuitable once they check affordability or carry out a DIP.

We are frequently seeing different lenders at the top of the table for affordability results, as the 'big boys' rein in their appetite under the pressure of unprecedented demand and reduced capacity to allow for social distancing and homeworking. In fact, over the past three months, there has only been one mainstream lender in the top five lenders for affordability. In September just four of the top 10 lenders for affordability were mainstream lenders, meaning that brokers were more likely to secure the loan amount requested by their clients with a smaller lender.

These lenders may not be quite so familiar to brokers and so they may not consider using them in the first place and, even if they do, may be unfamiliar with their affordability calculators – which could lead to missed opportunities and/or incorrect recommendations.

This is where an accurate affordability platform, like MBT Affordability, can help. By entering a client’s details into the platform first, brokers can clearly see how the behind the scenes tinkering impacts their options, enabling them to recommend the most suitable lenders. It also means brokers won't get caught out wasting time on a lender that has tweaked its affordability calculator without publishing the change,

The current mortgage market is indeed unprecedented in many ways, and the rise of smaller lenders, to step in where others are stepping back is great for the market as a whole. This is a trend brokers are seeing on service as well as affordability at the moment as they increasingly recognise that the choice of lenders is extremely wide and not just confined to the big players. Affordability is just one piece of the jigsaw, but an increasingly important one and it is so easy these days to research the whole market from this point of view, with accurate calculators that do the hard work for you. With asking prices continuing to increase, the ability to facilitate the maximum loan for clients is more important than ever, so make sure you don’t miss out by failing to consider all of the options.