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Mortgage brokers - talk to me about energy bills and affordability

Journalist: John Fitzsimons, Freelance

ended 30. August 2022

Morning brokers

Last week we had the announcement of another massive increase to the energy price cap, which takes effect from October. It seems inevitable that there will be further substantial increases too.

So I'd like to get a sense of what impact energy bills are already having on the mortgage advice process. Is this something that you're discussing with clients today? Is it having an impact on the borrowing decisions they are making?

It would also be great to get an idea of whether the situation is impacting lenders and their approach to affordability yet? Are there some lenders being a little more cautious around affordability already?

Thank you!

 

2 responses from the Newspage community

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Jamie Lennox
Director at Dimora Mortgages
With the rapidly escalating energy prices, it would be foolish for brokers not to discuss the sustainability of any house purchase being viable for the long term and house buyers should really be having a closer eye on property EPCs. It would also make houses with solar power become hot property in the months to come. We've already seen an application we submitted 2 weeks ago which couldn't proceed due to a property down valuation. On a new application, that same lender would now offer the client £8k less than we previously applied for and we suspect more changes will come in the background if they haven't already.
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Jamie Thompson
Mortgage Broker at Jamie Thompson Mortgages
I’ve had a young couple this week come back to me and say that they’ve decided not to move specifically because of increases in energy bills. They already own their own home, and have a baby on the way, so needed a bit more space. However they’re looking at the numbers and have decided that unless the government steps in and provide assistance with energy bills, a bigger place with an extra mouth to feed and more rooms to heat just isn’t viable. Lenders don’t seem too concerned at this point. Many just factor in ONS data for utilities but that will take some time to feed through to affordability calculators. In fact, some lenders have increased their loan to income limits recently. Raising interest rates, larger borrowing amounts, and increased energy costs could be setting us up from the perfect storm.