Kensington: Self-employed borrowers more conservative than FTBs

Michael Lloyd

October 18, 2019

Self-employed borrowers are more conservative than first-time buyers, Kensington Mortgages has found.

Kensington’s Affordability Tracker (KAT) showed that the average self-employed mortgage customer could have taken out a mortgage 29% larger than the original loan borrowed.

Meanwhile, the average first-time buyer could borrow only 19% more, leaving greater room for self-employed individuals to borrow more.

Mark Arnold, chief executive of Kensington Mortgages, said: “Despite Brexit uncertainty growing, borrowers remain confident about their borrowing habits as today’s results show homeowners are taking out larger loans compared to the previous quarter.

“With slower house price growth, many first-time buyers are grabbing this opportunity to step onto the property ladder.

“What’s interesting is that self-employed borrowers are leaning more towards the cautious side, as they have plenty of scope to borrow more if desired compared to first-time buyers.

“Unsurprisingly though, the North/South divide still exists.

“Borrowers in the North have the greatest room for affordability while in contrast, higher living and house prices mean those in the South East can only borrow slightly above the original amount.”

The tracker monitors the difference between the amount a homeowner borrowed on a mortgage compared to the maximum amount that a lender was willing to lend to that customer.

In Q2 the KAT dropped by 1.5% to a reading of 30.3%.

This means that the average homeowner is taking out a slightly larger loan compared to households in Q1 suggesting consumer confidence remains steady.

Households in the South East commuter belt are borrowing the most in the country, with the average borrower only being able to borrow 8% more than the initial amount secured.

First-time buyers in the same region were at the borrowing limit whilst self-employed borrowers had scope to borrow 8% more.

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