Mortgage size drops 9% to £136,000: Mortgage Broker Tools

Mortgage affordability has fallen to its lowest level in 2022, according to Mortgage Broker Tools.

The broker research platform’s latest Affordability Index shows the minimum average loan size offered by mortgage lenders fell to just over £136,000 in July, from £150,000 in January, a decrease of 9.3%.

The maximum average loan offered also slipped to £270,000 in July, from just over £274,000 in June.

The platform adds that its Analysis of different customer profiles shows that the number of affordable lenders able to offer mortgages to customers who want a high income loan has increased from 27 to 22 “in just a few weeks”.

He says this indicateare “that mortgage lenders tighten their appetite for lending to customers who want to borrow higher income multiples.”

The data comes as tThe current average cost of a house rose 7.8% to £286,397 in the year to June, according to the latest Halifax house price data released last month.

House prices have soared this year even though the Bank of England raised interest rates by 50 basis points to 1.75% last month, its largest increase since 1995, which took the base rate to a new 40-year high. This is the sixth rate hike since last December.

The central bank’s move comes as it battles rising inflation, which stood at 9.4% in June, and BoE forecasts will rise to 13% by the end of the month. year.

Mortgage Broker Tools general director Tanya Toumadj said“Having seen house prices rise sharply, in addition to seeing the onset of an acute cost of living crisis, it is perhaps unsurprising that affordability is taking a hit.

However, all of these factors are also likely to have a ripple effect, with potential buyers finding it difficult to afford to enter the property. market, easing the strong pressure created by recent surges in demand.

Market experts predict house prices will fall over the next two years, with Capital Economics suggesting up to 12% decline in London, and some reports of falling valuations are already emerging as a result.

“However, conflicting reports indicate that a slowdown in the housing market will further reduce supply, which will help support prices.”

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