The average loan size for a mortgage jumped by over £11,500 between April and May to £205,882 according to the Stonebridge Monthly Affordability Index.
This index uses ONS wage data, the Bank of England loan rate data and its own internal loan data to determine how much of the average borrower’s salary is taken up by mortgage repayments.
Stonebridge’s index is a reflection of the firm’s network of brokers and the lending activity they have monitored.
Specifically, between April and May a change was noticed as lenders have loosened loan limit criteria in line with FCA strategy.
As a result, affordability dipped in May, with mortgage repayments accounting for 38.9% of the average borrower’s salary, up from 37% in April.
This is despite modest improvements in both wages (+0.45% month-on-month) and mortgage rates (down 2 basis points to 4.47%).
“The big question now is whether this marks a temporary uptick in borrowing and cost or a more lasting shift in how much borrowers are prepared to take on,” said Rob Clifford, CEO at Stonebridge.
“If it’s the latter, we could be entering a phase where higher borrowing levels become the norm, with long-term affordability stats reflecting that choice — after all, this affordability change isn’t driven by rates rising but by consumer behaviour following regulatory changes.”
As such, Rob said this means brokers are seeing ‘renewed momentum’ in the market, particularly among higher earners and professionals who now qualify for larger loans.
He added: “This is a real opportunity for brokers to re-engage, revisit pipeline cases and add value by helping customers understand what’s now possible.”
