Mortgage affordability has dropped to its lowest level in 2022, according to the latest Mortgage Broker Tools (MBT) Affordability Index.

Data from the broker research platform shows that the minimum average loan size offered by mortgage lenders fell to just over £136,000 in July, which is down from £150,000 in January.

The maximum average loan offered has also fallen slightly to £270,000 in July, down from just over £274,000 in June.

Meanwhile, MBT analysis of different customer profiles shows that the number of affordable lenders able to offer mortgages to customers who want a high loan to income has fallen from 27 to 22 in just a couple of weeks, indicating that mortgage lenders are tightening their appetite for lending to those customers who want to borrow higher income multiples, Mortgage Broker Tools said.

Tanya Toumadj, CEO at Mortgage Broker Tools, said: “Having watched house prices rise sharply, in addition to seeing the onset of an acute cost-of-living crisis, it might not be surprising that affordability is taking a hit. However, all of these factors are also likely to have a knock-on effect, with potential buyers struggling to afford to enter the property market, therefore lessening the high pressure created by recent surges in demand.

“Experts across the market are predicting house price falls over the next two years, with Capital Economics suggesting as much as a 12% drop in London, and some reports of down valuations emerging already as a result. However, there are contradicting reports that a downturn in the housing market will further reduce supply, which will help to underpin prices.

“Whatever happens, there is little doubt that we are entering an interesting and turbulent time for mortgage affordability. As proven time and again throughout the unpredictable pandemic years, the answer to ensuring a client gets the best deal in a complex environment is comprehensive research and reliable data, backed up by technology. As the most comprehensive tool available on the market, MBT should be a broker’s first port of call.”