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Mortgage affordability is set to become a more pressing issue over the next 12 months, new research suggests.
At the Future of Mortgage Servicing conference at the Belfry, hosted by Phoebus Software, Target Group and the Financial Services Forum, leaders from the mortgage industry were asked “Is affordability set to become a more pressing issue by 2027?”
The poll results, based on the responses of 100 C-suite mortgage professionals at the event, found that 77% of lenders thought affordability was set to become a more pressing issue.
Almost half of the lenders polled – 47% – said they thought it was set to become worse, 30% said they thought it would become significantly worse, 17% said mortgage affordability would not change, while 7% said they thought it would improve.
Adam Oldfield, CEO at Phoebus Software, commented: “Despite a resilient housing market and lower rates than 12 months ago, the tax increases announced in the budget, along with higher unemployment, could affect mortgage affordability. So it’s understandable that industry leaders are predicting that it will become a more pressing issue.”
Pete O’Connor, chief executive of Target Group, commented: “The fact that three-quarters of leaders we polled in the mortgage industry expect affordability to worsen highlights the impact of the chancellor’s use of fiscal drag to raise revenue – bringing 5.2 million people into paying income tax and moving another 4.8 million into the upper rate band, quite aside from the first fuel duty increase in 15 years. All this is eroding disposable incomes.
“Growth expectations have been downgraded for every forthcoming year until the end of the decade and the tax burden is forecast to rise to an all-time high of 38.3% of GDP in 2030. So lenders are not being unreasonable. Let’s not forget the rate of UK unemployment rose to 5.1% in the three months to October as unemployment hits a post-pandemic high, showing another sign the jobs market has weakened.”
What can mortgage borrowers expect in 2026?
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