New affordability rules appear to be squeezing out lower income homebuyers.
According to the Mortgage Advice Bureau, aspiring buyers searching for a new mortgage between July and September had an average combined income of £56,559.
This was up by 5 per cent from £53,879 between April and Juune and up 21 per cent year-on-year from £46,905 a year ago. This growth dwarfs the latest figures for annual wage growth, which is at just 0.8 per cent.
Mortgage Advice Bureau says this data suggests the new focus on affordability assessments under the Mortgage Market Review (MMR) is attracting buyers with greater financial resources behind them.
Longer terms rise in popularity
MAB’s tracker also indicates that 25- to 29-year payment terms are falling in popularity. Both longer terms of 30 to 39 years and shorter terms of 15 to 24 years are becoming more popular.
The fact that consumer preferences are becoming polarised is a sign of the conflicting pressures on buyers at different stages of life.
Younger buyers are likely to be interested in longer terms that allow them to spread their mortgage repayments. But with restrictions on lending beyond people’s normal retirement age, older borrowers are under pressure to fit their repayments into their working lives.
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