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Brokers - what type of borrowers are lenders becoming less keen on?

Journalist: John Fitzsimons, Freelance

ended 06. September 2022

Morning brokers

Mortgage Broker Tools have put out some data suggesting that the average maximum loan size on offer to higher earners (those earning £100k plus) has fallen by £7,000 since March, compared to a £2,000 drop for lower earners.

Have you seen lenders becoming less enthused about lending larger amounts to higher earners? And more generally, are there particular types of borrower who you have noticed are becoming less sought after among lenders? Is this a sign of things to come?

And how does this impact the advice process? Are you having to put in more work to keep on top of the shifting approach from individual lenders?

4 responses from the Newspage community

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Mike Staton
Director at Staton Mortgages
I think one of the biggest mis-conceptions borrowers have is that a lender's criteria and affordability remains consistent permanently. I have seen a slight decrease in affordability on some fronts, but this can be expected as disposable income reduces with the current cost of living crisis. We have also seen some lenders increase affordability offerings from 4.49 times income to 5.5 times income. Whilst there are some high street lenders that are giving the impression that they do not want to lend at the moment, there are some that are desperate for business. Just be aware that the Agreement in Principle you gave your client last week, probably isnt worth the paper it is written on today as the industry is changing daily
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Imran Hussain
Director at Harmony Financial Services
It's a worthy reminder that lenders will always adjust what they wish to lend to a client regardless of income in line with the cost of living and data they receive from the ONS; it should come as no surprise to anyone that lenders are adjusting what they wish to lend clients. With utility bills spiralling out of control currently it's why the value of advice now is super important to educate clients.
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Jamie Thompson
Mortgage Broker at Jamie Thompson Mortgages
Lenders seem keener than ever to lender higher amounts. Well, maybe since the early 2010s. This is evidenced by Nationwide now considering lending 5 and a half times somebody income to all existing mortgage customers, Halifax recently increasing their maximum lending amount to 5.5 times income for high earners, and other lenders like Accord getting in on the game too. Now able to charge a higher price for borrowing money, why wouldn't they want to lend more!? The key is they'll only consider these high loan amounts to certain applicants. The difference between what lenders will consider lending to any one individual continues to widen in my experience. This is only exacerbated as soon as a borrower has a little bit of debt. Recently I had a couple earning about £45k between them offered over £100k more lending with one lender than another. This shows the value of advice if you are trying to maximise your borrowing amount or have been told no by your own bank.
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Jamie Lennox
Director at Dimora Mortgages
We've certainly noticed lenders taking a restricted approach towards the lower-earning households. We've had a first-hand experience where we quoted a borrowing amount and then the week later the amount has reduced by over £8,000. Ultimately the regularly changing criteria and affordability are making an agreement in principle worthless as by the time the client comes to submit an application the lender's stance could have completely changed on how much they will provide the client. We're having to spend an awful lot more time educating our clients about what's going on in the background and reminding them we need to revisit figures prior to offering on a property even if they have an agreement in principle. The worst bit is these affordability changes often slip under the radar as we rarely get notification that a lender plans to amend their affordability calculator.