The average maximum loan available to mortgage borrowers fell to a record low in January, according to the latest MBT Affordability Index.

The Index revered that the average maximum loan available across the whole of the market fell to £234,224, a fall of 12% on January last year and a drop of nearly 14% from its peak last September.

First-time buyers saw the average maximum loan available to them fall to £230,555 last month, compared to £264,411 in January 2020 – a decrease of nearly 13%.

For the first time this month, the MBT Affordability Index has included separate data to provide insights into the affordability landscape for the self-employed, and it has revealed a more stable picture than suggested by some headlines.

According to the Index, the average maximum loan offered to self-employed mortgage applicants was £221,400 in January this year – a fall of just over 3% from its peak last August. The minimum average loan available to the self-employed also recovered to £118,800 in January. This represents an increase of 45% on its lowest point, which was last April, and a rise of just over 43% on November.

Tanya Toumadj, CEO at Mortgage Broker Tools, said: “One of the trends we have noted in tracking affordability over the last year is that affordability has become a key lever for lenders in controlling business volumes. Traditionally rate has been changed by lenders as a means of growing or tempering lending levels, but increasingly lenders are also using criteria and affordability calculations.

“Through the second half of 2020, when customer demand was high and lender service was under pressure, we saw around three to five changes to affordability calculators every week. The record low maximum loan amount available in January reflects this ongoing dynamic and the mounting pressure on lenders as we approach the scheduled end of the stamp duty holiday.

“However, brokers should not be disheartened when it comes to finding the right solutions for their clients. The latest data from Moneyfacts has reported that product choice has increased by 42% since October and is now at its highest level since prior to the first lockdown. Our data shows there is a suitable affordability option for 80% of all cases and so, while the average trends may be down, there are still lenders that want to, and are able to, lend the loan amount requested by most clients.

“The trick is being able to identify those lenders amidst so many changes. This is where a technology platform like MBT Affordability can help brokers to deliver their clients better outcomes, with instant data-driven research that identifies the best way to reach their lending objectives.”