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Affordability actually improving insists mortgage broker

Affordability actually improving insists mortgage broker

The average salary of buyers seeking a mortgage fell to a near-four year low in June according to the Mortgage Advice Bureau. 

Twelve months ago, the average primary salary of mortgage applicants peaked at £41,106 following the introduction of the Mortgage Market Review a few weeks earlier. 

In comparison, the typical primary income for a borrower in June 2015 was just £34,584 - this is an annual fall of 16 per cent and the lowest figure seen since August 2011. 

This comes despite a six per cent increase in the size of the average purchase deposit since June 2014. Purchase applicants put forward an average deposit of £75,625 in June 2015, up from £71,474 year-on-year.

As a result, average loan-to-values have fallen slightly from 69.8 per cent in June 2014 to 69.2 per cent last month, as buyers borrow less in relative terms and shoulder more of the cost of their purchase themselves. 

However, the typical purchase deposit represented 1.74 times the average buyer’s primary salary in June 2014 – this has since risen to 2.19 times salary.

MAB says that following a recommendation from the Bank of England’s Financial Policy Committee last year, household finances are already being stress tested against a 3.0 per cent base rate hike when applying for a mortgage. 

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