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Lenders tighten affordability for the self-employed

Jake Carter

March 22, 2021

The number of cases where at least one lender is available to meet the loan requirements of self-employment mortgage applicants has fallen in February, according to the latest MBT Affordability Index.

The data shows that 67% of self-employed cases processed through MBT Affordability had at least one affordability option, down from 71% in January.

In February, 31% of cases were deemed to be unaffordable based on the clients’ required loan amount and lenders were unable to lend on just 2% of cases.

In contrast, across the whole of the market, 79% of cases were affordable in February, which is slightly down from the peak of 80% in January.

There was at least one lender able to meet the loan requirements of 86% of first-time buyers, 84% of remortgage customers and 81% of home movers.

The average maximum loan available to self-employed mortgage applicants dropped by just over 2% to £216,000 in February.

The biggest change was the average minimum loan available, which fell by more than 18% to £96,935.

Tanya Toumadj, chief executive at Mortgage Broker Tools, said: “The self-employed continue to face a complex affordability landscape as more lenders tighten criteria for mortgage applicants in this group and the number of options reduces.

“We have also seen the spread between the average minimum available loan size and the average maximum available loan size widen to more than £119,000.

“For brokers who only try one or two lenders, this can give a false impression that their clients have no chance of achieving the loan size they require.

“However, it’s important to remember that there was at least one affordable option for more than two thirds of self-employed cases processed through the MBT Affordability platform in February.

“The message here is that the choice of lender makes a big difference to the amount a self-employed mortgage applicant can borrow, so brokers need to make sure they are considering all of the affordability options to ensure they are providing their clients with the most suitable recommendations.

“We often speak about the importance of whole of market affordability research, but it is more essential than ever in helping brokers secure the best outcomes for their clients, especially self-employed clients where calculations can be more complex and more varied.

“This is where a platform like MBT Affordability can help – empowering brokers through technology to quickly identify the lenders that will be most able to meet their clients’ lending requirements.”


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