Tighter affordability will aid advisers
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The £2bn annual banking levy could push more consumers to seek mortgage advice as borrowers are increasingly turned away from high-street banks.
Chancellor George Osborne announced in the emergency Budget that banks, building societies and non-UK banks operating in the country will face a new annual levy from January 2011.
First Action Finance head of communications Jonathan Cornell says the introduction of this levy may mean that affordability criteria becomes even tighter as lenders keep a close eye on their balance sheets.
He says: “What will probably happen is lenders will tighten the screws on their affordability models. We are seeing a big schism developing in the mortgage market, where you have got the ultra-prime clients for the high-street banks and another class of people that are becoming disenfranchised with the mortgage market.”
Cornell says there will still be those specialist lenders that want to cater to borrowers who fall short of being classed as prime but argues that stricter criteria for borrowers from highstreet banks may have an indirect positive effect for mortgage brokers.
He says: “A likely tightening of the affordability models will probably push people away from the high-street banks. This could potentially be good for the mortgage advice sector as more people will need help.”
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