The ‘affordability gap’ for first-time buyers fell to a record low of 11% last month, according to the latest MBT Affordability Index.
The ‘affordability gap’, where no lender is able to meet the loan amount requested by a broker, peaked for first-time buyers in April at 24% so the October figure means that brokers are more than twice as likely to be able to source a lender to meet the loan requirements of their first time buyer clients than they were during the first full month of the first lockdown.
For the whole of market, the ‘affordability gap’ remained at 16% for the third consecutive month. It dropped slightly for home movers, from 18% to 15% and nudged downwards for remortgage customers from 13% to 12%.
However, where lenders are unable to provide the loan requested by a broker, the gap between the loan requested and the loan amount offered is widening. In October, this difference was the highest it has been all year at £22,450, up from £20,538 in September.
Tanya Toumadj (pictured), CEO at Mortgage Broker Tools, said: “The ‘affordability gap’ shows brokers how likely it is that they will be able to source a lender that can provide the loan amount requested by their client. So, it’s good news for first-time buyers that this hit a record low in October, and that it remains low for other customer segments.
“However, where brokers are unable to secure the loan requested by their client, the difference between the loan requested and loan offered is as high as it has been since we started analysing the data. This can give brokers a false impression if they only try one or two lenders and find that the loan amounts offered fall well short of their expectations, when really there are many lenders that could be able to meet the loan size requested.
“This is why it is so important that brokers use a platform like MBT Affordability that can help them to easily identify the lenders that will be most able to help their clients meet their objectives.”