Affordable mortgages for FTBs dwindle

84% believe current economic conditions complicate the process of borrowing, report reveals

Affordable mortgages for FTBs dwindle

The availability of affordable housing options for first-time buyers in the UK saw a significant fall in 2023, according to recent data from Mortgage Broker Tools (MBT) released in conjunction with the Pepper Money Specialist Lending Study.

The MBT research indicated a notable decline in the number of 90% loan-to-value (LTV) mortgage options available to first-time buyers, with a 40% drop reported last year. Similarly, those borrowing at higher loan-to-income ratios experienced a 27% reduction in affordable options.

MBT, in collaboration with Pepper Money, offered an in-depth analysis of broker activity and customer insights, highlighting the challenges faced by prospective homeowners in the current economic climate.

The Specialist Lending Study revealed that 84% of the respondents believe the prevailing economic conditions will complicate the process of obtaining a mortgage, while the MBT Affordability Report found that nearly nine out of 10 brokers, or 89%, are finding it increasingly difficult to secure the desired loan amounts for their clients, largely due to the ongoing cost-of-living crisis.

Continued high inflation is still causing pressure on household budgets,” said Tanya Toumadj (pictured right), chief executive at Mortgage Broker Tools. “However, this hasn’t ultimately had a real impact on borrowers being able to secure the loan size they want as the percentage of cases where there’s at least one lender able to provide the loan required remains stable at around 75%.

“What has changed is the range of options, with the average difference between the highest loan offered and lowest loan offered for the same customer increasing from £127,000 to £145,000.”

Ryan Brailsford (pictured left), business development director at Pepper Money, emphasised the importance of understanding the correlation between customer experiences and broker trends, particularly in light of the affordability challenges exacerbated by squeezed household budgets.

“Our Specialist Lending Study found that some customers are considering downsizing to reduce their outgoings, while others have taken on additional employment to earn more income,” Brailsford said. “Working with a lender that can properly consider all sources of income can help customers to achieve the affordability they need to secure the mortgage they deserve.”

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