UK banks are tightening their belts when lending to homebuyers, as they begin to incorporate the cost of living crisis into their mortgage models.
Potential buyers might struggle to get the size of loan they need, according to mortgage brokers, with surging household costs and sky high energy bills forcing lenders to reassess what mortgages people can afford.
This will make it harder for consumers to borrow as much as previously, according to a recent report in The Guardian.
Santander has become one of the first banks to revise its affordability calculations, with other large lenders like HSBC, Barclays, Lloyds Banking Group and NatWest expected to follow suit.
“With living costs spiralling out of control and national insurance and dividend income tax rates rising, it should not come as a surprise that lenders will have to adjust how much they will allow people to borrow,” Imran Hussain, director at Harmony Financial Services, told Mortgage Solutions.