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Is mortgage affordability becoming more complex?

Journalist: Shekina Tuahene, Mortgage Solutions

ended 26. April 2023

Hi All,

This is for Mortgage Solutions.

I'd like some broker commentary to the Mortgage Broker Tools story that mortgage affordability has become more complex, harder and you are now having to do more to secure loans for clients.

Is this the case for you? Do you feel like you are doing more to secure mortgages due to affordability constraints compared to a year or so ago?

Also, is it more complex for certain borrowers? Which ones?

Thanks in advance.

3 responses from the Newspage community

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Editor
Rita Kohli
Managing Director at The Mortgage Stop
People's circumstances have become much more complex. From second jobs to self employed or separated families or people buying with friends or family - there are no simple cases these days. And with this comes much more scrutiny over borrowers income and expenditure from lenders. Compared to recent years we have found that we have had much more challenging conversations with borrower's on some of their numbers giving them a reality check as lenders tighten up their affordability and stress tests.
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Benjamin Blyth
Director at Houz Mortgages
I don't believe affordability is becoming more complex in terms of assessment. With the different tools available to brokers and lenders to assess affordability, it's better than ever to be confident in the result of a calculator as many are 'plugged in' live to lenders. Legal & General's SmartrFit is one great example of this. These tools means brokers do not need to know the ins & outs of affordability calculations of all the different lenders - as they all have their quirks.

What is becoming more complex is consumer spending. Dozens of subscriptions just to watch TV is one example - it's not just Sky & a TV Licence anymore. We're all still getting used to what energy bills actually are - ONS figures will become less fit for purpose here as people turn to off-grid solutions such as solar to heat homes, & fueling their EVs from the sun instead of buying petrol. I believe it's important that lenders can & will intervene in their calculators where required for things like this.
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Gary Bush
Financial Adviser at MortgageShop.com
Mortgage affordability is indeed more complex now than it has been in our 35 years of trading - it's clear that attempting to traverse the various lenders' black box affordability calculations is no easy thing. Has this made UK lending more robust and foolproof from the days pre the 2008 crash, we don't think so. It's certainly given lenders the opportunity to have more analysis available on client circumstances, a kind of beefed-up Know Your Client, but is this really going to help avoid higher default levels for lenders, only the future has the answer to this. One thing that is for sure is that once mortgage applicants have done one application with a lender direct and have waited weeks for telephone appointments, been asked to travel to bank branches for ID purposes, and then finally fail affordability after weeks of drudge they certainly then come looking for a decent independent financial firm to take the problem off of their hands.