"One of the biggest pieces of news is the two major lenders will now go to five times income on loans of more than 85% LTV."
2020 has started with a buzz and, if you are anything like the brokers I have been speaking to, you will have experienced a very busy January for new enquiries, as the decisive nature of December’s general election has delivered a boost to the property market.
In fact, Rightmove recorded its busiest ever month in January and it seems as though we have very quickly moved from an environment of stalemate to one where there could be upward pressure on prices once more.
This, of course, puts more emphasis on the importance of achieving the right affordability for your clients, so what have the lenders been up to on this front?
One of the biggest pieces of news is the two major lenders will now go to five times income on loans of more than 85% LTV. Lenders are only allowed to write so much of this type of business and so these particular deals are unlikely to stay forever, but they are very useful for the moment and could prove vital to your client winning a race to the home of their dreams. Minimum Incomes apply on these deals, but they are not that high!
Nationwide has also finally amended its calculator to accurately reflect the Debt to Income ratios that it applies on its online system, and this should prevent a lot of cases failing at DIP because of affordability. And the lender has changed a lot more besides. For example, like for like remortgages can now enjoy better affordability results, but Nationwide’s treatment of bonuses, commission and overtime will all produce different results, depending on the frequency of such additional payments and the overall case details. As far as I can tell, there is no actual pattern to these changes and the ultimate affordability will depend on the individual case.
These are just two examples of the changing affordability landscape at the beginning of this year. Some openly communicate their affordability changes, but many don’t. So, the only reliable way of staying on top of these changes and ensuring you are consistently delivering your clients with accurate advice on their affordability options is with a research platform like MBT Affordability.
Until next time, I hope these affordability changes present you with new opportunities to help your clients and, if you are not 100% sure of your best option, make sure you do use a research platform that delivers 100% accurate calculations.