Mortgage lenders have cut the loan size they offer to customers by almost a fifth, according to Mortgage Broker Tools, reflecting a “softening in mortgage availability over recent months”.
The criteria platform says that the average minimum loan size available to borrowers fell to £114,776 in the eight months to May, from £141,224 over the eight months to last September.
It adds this is a 19% fall in the average loan size offered by some lenders.
Over this period the Bank of England has hiked the base rate 13 times in a row since December 2021 to stand at 5%. The central bank is battling to calm inflation, currently at 8.7%.
Mortgage Broker Tools chief executive Tanya Toumadj says: “It’s unsurprising that the combination of increased living costs and rapidly rising rates have put the squeeze on mortgage affordability.
“However, our data also shows that during this same period, there has been little change to the average maximum loan size available, meaning there are some lenders that continue to offer good affordability options.
“In this environment, brokers can’t take affordability for granted. The market is becoming more complex and researching the best options for customers from a wide range of lenders could make the difference between whether or not they are able to achieve their goals.”
