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·   The public’s perceptions of mortgage lending criteria remain out of touch with reality

·   Brits believe salary multiples to obtain a mortgage have only slightly improved since early 2009, with the average now believed to be at 3.3 times an individual’s salary

·  Two fifths (40%) believe a 20% deposit or higher is needed to secure a mortgage

Brits’ perceptions of the mortgage market are still lagging behind reality, according to new research* from unbiased.co.uk, the professional advice website, as many believe they are unable to get a suitable mortgage due to lenders keeping a tight hold on lending criteria. After a decade of so called “easy credit”, the tightening of lending criteria over the last 18 months has had a lasting effect on the public.  Over the last 12 months, perceptions of what people can afford when it comes to income multiples have remained on the pessimistic side, with the average now being placed at just 3.3 times an individual’s salary.

One fifth (22%) of Brits think they can only get between 0.5 and 2.5 times their salary and almost a quarter (24%) of Brits believe lenders would restrict a home loan to up to 3 times their salary.  Two fifths (40%) of people believed they need at least a 20% deposit or more in order to secure a mortgage in the last 12 months.

Karen Barrett, Chief Executive of unbiased.co.uk comments, “The mortgage market has experienced tremendous change and after an initial tightening of lending criteria last year it is understandable that many consumers still believe this to be the case and are confused as to what is now available to them. It is not surprising that many potential homeowners have taken a pessimistic view of lending criteria, deposit size and what income multiples are available to them. 

“However, in reality many lenders are now relaxing their lending criteria, offering now around 4 times or more an individual’s income**. It will be interesting to see whether public perception will keep up with these developments.  Lenders have also recently re-entered the high loan-to-value space, meaning that borrowers do not require such a large deposit in order to get an affordable mortgage.  An increasing number of lenders are now offering 90% LTV deals***, meaning especially first time buyers who were previously priced out of the market can now look to see whether they can access an affordable deal.

“While we haven’t returned to a period of ‘easy credit’, there is now a much higher quantity of affordable mortgage deals on the market place. We urge consumers to visit a whole of market mortgage adviser to dispel the myths and get the best advice on their mortgage options.  Many may be unnecessarily putting off buying a property due to their belief they cannot obtain their required mortgage.  A whole of market mortgage adviser can look at all the mortgages available and find the best deal not just by rate but also by income multiple and deposit size.  You can carry out a free and confidential search at unbiased.co.uk to find a whole of market mortgage adviser near you.”

ENDS

* Opinium Research carried out an online poll of 2,005 British adults from 20th to 23rd November 2009. Results have been weighted to nationally representative criteria.

** Average income multiples are based on London & Country mortgage calculator on 07 May 2010

*** Range of first time buyer deals, including 90% LTV according to Moneyfacts 11 May 2010  (http://moneyfacts.co.uk/compare/mortgages/first-time-buyer/ )

Karen Barrett, Chief Executive, unbiased.co.uk: 020 7833 3131

Anna Schirmer/Anna Moulds/Charli Scouller, Lansons Communications: 020 7294 3682

For expert commentary or case studies from over 150 media-friendly IFAs, journalists should visit www.unbiased.co.uk/bluebook.

Twitter: @unbiased_co_uk

LinkedIn: Unbiased.co.uk - Online networking for professional advisers

About unbiased.co.uk, the professional advice website

The unbiased.co.uk portal is a free and confidential UK-wide search matching consumers with local professional advisers: ‘find an IFA’, ‘find a mortgage adviser’, and ‘find a solicitor’, and is currently inviting registrations for its ‘find an accountant’ service.  These searches enable consumers to find professional advisers by postcode, area of specialism, qualification and payment method. In 2009, unbiased.co.uk fulfilled half a million searches for local, professional advice. 

IFA Promotion, the organisation behind unbiased.co.uk, is now in its 21st year, and was set up to promote the benefits of independent financial advice to consumers.  IFAP is sponsored by the following companies:

Registered Office: unbiased.co.uk is the consumer brand of IFA Promotion Ltd, 90 St. Vincent Street, Glasgow G2 5UB. Registered in Scotland: No. 114606

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