Latest data suggests that the ‘affordability gap’, where no lender is able to meet the loan amount requested by a broker, dropped to only 15% of cases in August.
This means that there is a greater likelihood that brokers will be able to source a lender to meet the loan requirements of their clients than they were earlier in the year.
According to data analysis by MBT Affordability, the affordability gap peaked in February, when there were no lenders able to meet the loan amount requested by a broker on 21% of cases.
However, on those cases where brokers have been unable to find the loan size requested by their clients, the average difference between the loan amount requested and loan amount offered peaked in August at 11%, up from 7% in March. This indicates that this group of clients are further away from accessing the loan size they want than they were earlier in the year.
Tanya Toumadj, CEO at Mortgage Broker Tools, said: “The affordability gap is an important element of the MBT Affordability Index as it shows brokers the likelihood that they will be able to source a lender with the ability to meet the loan requirements of their client. The larger the affordability gap, the less likely that the market will be able to offer a solution, and vice versa.
“Of course, knowing whether a solution is available in the market and being able to source the right lender are two different things, and brokers who only work with a small number of lenders are less likely to identify the best lender for their clients. Which is why a platform like MBT Affordability is an invaluable tool in helping brokers to help their clients meet their objectives.”
The affordability gap was largest for home movers in August, with 15% of cases were there was no lender able to meet the requested loan amount, although this was down from a peak of 22% unable to meet the requested loan amount in February.
Meanwhile, the affordability gap for first-time buyers was 12% in August, down from a peak of 24% in April. And the affordability gap for remortgage cases has remained relatively consistent throughout the year, peaking at 14% in May, and hitting 13% in August.
Toumadj added: “Lenders need to manage their risk portfolio, which means they may have greater appetite so different types of loans at different times, and this will impact how much they are prepared to lend. The best way to secure the right loan amount for a client is by carrying out thorough research of the market based on their individual circumstances, using a platform like MBT Affordability.”