Mortgage affordability has now dropped to its lowest level so far this year, according to the latest Mortgage Broker Tools (MBT) Affordability Index.

Data from the broker research platform revealed that the minimum average loan size offered by mortgage lenders fell to just over £136,000 in July, a figure down down from £150,000 in January.

The maximum average loan offered also fell slightly in July, to £270,000, down from just over £274,000 in June.

At the same, MBT analysis of different customer profiles has highlighted that the number of affordable lenders that can offer mortgages to customers who want a high loan to income has fallen, from 27 to 22 in just a couple of weeks. MBT said that this indicates that mortgage lenders are tightening their appetite for lending to customers who want to borrow higher income multiples.

“Having watched house prices rise sharply, in addition to seeing the onset of an acute cost-of-living crisis, it might not be surprising that affordability is taking a hit,” commented MBT CEO, Tanya Toumadj. “However, all of these factors are also likely to have a knock-on effect, with potential buyers struggling to afford to enter the property market, therefore lessening the high pressure created by recent surges in demand.

“Experts across the market are predicting house price falls over the next two years, with capital economics suggesting as much as a 12% drop in London, and some reports of down valuations emerging already as a result. However, there are contradicting reports that a downturn in the housing market will further reduce supply, which will help to underpin prices.

“Whatever happens, there is little doubt that we are entering an interesting and turbulent time for mortgage affordability.”

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