Affordability appears to be improving in the housing market, despite rising prices according to the latest broker research.
Data from the MBT Affordability Index shows that the ‘affordability gap’ dropped to a record low of 15 per cent in November.
This figure, showing the proportion of loans where no lender is able to the meet the amount requested by a broker, is considerably less than the 21 per cent recorded in February this year.
Mortgage Broker Tools, which compiles the index, says this mean brokers are more likely to be able to source a lender to meet the affordability requirement of their clients than they were earlier this year.
However despite this positive picture the index shows that when brokers can’t place a loan the gap between the request and what is offered by lenders has widened.
In November, the average difference between the loan requested and maximum loan offered was £23,185, which is the highest figure for the year. In contrast this stood at £22,450 in October and a just £15,000 in February.
This data also looks at specific sectors of the market. For first time buyers, the affordability gap continued to fall hitting a record low of 10 per cent in November.
However, the trend was in the opposite direction for home movers and remortgage customers, with the number of lenders unable to provide the loan amount requested increasing in both categories.
Mortgage Broker Tools chief executive Tanya Toumadj says: “The affordability gap is an important trend to track, as it shows brokers how likely it is that they will be able to source a lender to provide the loan requested by their client.”
She says the overall trend was good news for brokers. However she adds: “There is also a warning for brokers within the data, because where they are unable to secure the loan requested by their client, the difference between the loan requested and maximum loan offered is at its highest level.
“For brokers who may only try one or two lenders, this can give a false impression that they will not be able to achieve the required loan amount, even though there could be plenty of suitable options if they were to shop around.”
