Mortgage Lenders Defy Expectations with High Loan-to-Income Ratios

The latest figures from the Bank of England have left mortgage experts surprised, with high loan-to-income (LTI) lending tumbling to an eight-year low. However, lenders in the specialist and complex arena are stretching LTIs out, with some lenders pushing LTIs out to 6x income for the right applicants.

The Specialist Lenders’ Approach

Saffron Building Society’s head of business development, Tony Hall, expressed surprise at the BoE’s figures, citing that lenders in the specialist and complex space are willing to take on each case on its merits. Hall believes that if someone can demonstrate that borrowing up to six times their income is affordable, then that’s a great solution. LTIs are being stretched out appropriately and not across the board.

Mortgage applications on the rise

The Changing Landscape of Affordability

Hodge for Intermediaries’ national account manager, James Enos, was also surprised by the latest BoE figures. Enos highlights that the specialist market has been growing rapidly, and lenders have had to approach affordability in a slightly different way, particularly since the pandemic. He believes that lenders have been stretching affordability for some time, and it’s needed, given the significant property price rises.

The Role of Brokers

Rainstone Money mortgage broker Matthew Lawrence adds that lenders are coming out saying that the LTI can be stretched to 6x, but when you take into account affordability, people are spending a lot more money on things such as car lease deals compared to what they were five years ago. It comes down to the affordability side, which is a challenge, and the client side, in that they are conscious about that expenditure.

Mortgage brokers play a crucial role in finding the right clients

The Future of Mortgage Lending

As spending habits change, is it possible for people to apply for mortgages that allow for 6x income? The answer lies in finding the right clients and doing it in the right way for those clients. With lenders flexing and becoming more comfortable stretching the LTIs to several different clients, the future of mortgage lending looks promising.

The future of mortgage lending is looking bright