Mortgage lenders expect struggles with mortgage affordability to worsen in the years ahead.
Phoebus Software polled mortgage professionals and found that half (47%) thought mortgage affordability will worsen in 2027, with a further third (30%) thinking it will be significantly worse.
Adam Oldfield, CEO at Phoebus Software said: “Despite a resilient housing market and lower rates than 12 months ago, the tax increases announced in the budget, along with higher unemployment, could affect mortgage affordability.
“So it’s understandable that industry leaders are predicting that it will become a more pressing issue.”
The poll was taken at the Future of Mortgage Servicing conference at the Belfry, hosted by Phoebus Software, Target Group and the Financial Services Forum
Pete O’Connor, chief executive of Target Group, said: “The fact that three-quarters of leaders we polled in the mortgage industry expect affordability to worsen highlights the impact of the Chancellor’s use of fiscal drag to raise revenue – bringing 5.2 million people into paying income tax and moving another 4.8 million into the upper rate band, quite aside from the first fuel duty increase in 15 years.
“All this is eroding disposable incomes. Growth expectations have been downgraded for every forthcoming year until the end of the decade and the tax burden is forecast to rise to an all-time high of 38.3% of GDP in 2030. So lenders are not being unreasonable.
“Let’s not forget the rate of UK unemployment rose to 5.1% in the three months to October as unemployment hits a post-pandemic high, showing another sign the jobs market has weakened.”
The FCA appears open to loosening mortgage affordability rules, which allow more people to get on the housing ladder.
This could include adding more flexibilities in the rules for the self-employed and young people on lower incomes.