Mortgage applicants may struggle to get the amount they need

House hunters planning to apply for a mortgage may find they can’t borrow as much as they could have last week as banks tighten up lending rules. SPF Private Clients said one client who applied for a loan with Santander found that the amount they could borrow had fallen 10% between March and April. The bank has been one of the first to change its affordability models to factor in April's increase in national insurance and the rising cost of living. Inflation in the year to March hit a 30-year high at 7%, according to the Office for National Statistics (ONS). Several banks use ONS data about family and household expenditure to predict borrowers' spending so that they can see if they will have enough money to pay their mortgage. Mark Harris from SPF Private Clients said: "Lenders will rarely share the impact of ONS changes on their affordability calculations, even though everyone knows it is happening. It is inevitable with rising energy bills, interest rates and increases in the cost of living that borrowers will have less income left over to put towards the mortgage." Nick Mendes from the broker John Charcol said he expected first-time buyers to be particularly affected. "Those who typically look at higher loan-to-value products often have less disposable income, so you would expect these applications to be under greater scrutiny," he said.

The Times