Mr Affordability says: How is Covid-19 impacting affordability calculations?

It’s the purchase side of the market that has been affected the hardest as remortgages have traditionally been more accommodating to AVMs, and HSBC has the ability to use an AVM on properties up to £2m in value.

The next wave of changes will be the affordability treatment of bonuses, overtime and commission, as lenders stop taking this additional income into account. So far, it doesn't look like NatWest, Nationwide and Coventry Building Society are changing their affordability calculators to reflect this, however, and brokers will need to know which lenders are changing their affordability calculations and which are not. As an example, HSBC will allow additional income for NHS workers, which is to be commended, of course.

Another class of clients to be hit from an underwriting perspective will be the self-employed or limited company directors. Lenders are unlikely to base a case on 2018/2019 net profit figures when the applicant is in an industry where there is currently no work. Again, HSBC has been first out with a new plan – asking for an applicant’s last three months business bank statements, and each case will be underwritten individually. This is potentially a sign of things to come.

At MBT Affordability, we are trying to reflect the ongoing issues around maximum LTVs and changes to affordability calculations across the market, so that we are able to keep brokers informed as to how things develop in this uncertain world.

It is at time of change, like this, that it is most important for brokers to carry out full, up-to-date affordability research for all of their clients. The situation is changing so quickly, and so previous assumptions are no indication of the current reality. So, make use of the tools that are available to you, stay safe and look after yourselves.