"Self-employed borrowers are leaning more towards the cautious side, as they have plenty of scope to borrow more if desired compared to first-time buyers."
Its figures show that the average self-employed mortgage customer could have taken out a mortgage 29% larger than the original loan borrowed. The average first-time buyer, meanwhile, could borrow only 19% more – leaving greater room for self-employed individuals to borrow more.
Overall, homeowners were borrowing more in the second quarter of 2019 and had less disposable income each month than the households who took out a mortgage in the previous quarter.
Households in the south-east commuter belt are borrowing the most in the country, with the average borrower only being able to borrow 8% more than the initial amount secured. Broken down by group, first-time buyers in the same region were right at the borrowing limit (after applying standard stress modelling to ensure customer affordability), with no room to borrow more. In comparison, self-employed borrowers had some scope to borrow 8% more.
By contrast, borrowers in the north have the most financial headroom with the average homeowner able to borrow 52% more than the initial sum borrowed.
Mark Arnold, chief executive of Kensington Mortgages, said: “Despite Brexit uncertainty growing, borrowers remain confident about their borrowing habits as today’s results show homeowners are taking out larger loans compared to the previous quarter. With slower house price growth, many first-time buyers are grabbing this opportunity to step onto the property ladder.
“What’s interesting is that self-employed borrowers are leaning more towards the cautious side, as they have plenty of scope to borrow more if desired compared to first-time buyers. Unsurprisingly though, the North/South divide still exists. Borrowers in the North have the greatest room for affordability while in contrast, higher living and house prices mean those in the south-east can only borrow slightly above the original amount.”
