Single Income Homebuyers face huge uphill task

New statistics from the Financial Conduct Authority, analysed by a legal firm, show the clear disadvantage and worsening picture for single income homebuyers.

This has been exemplified by 2023 data from the FCA, showing the biggest drop for five years in the number of single-income mortgages issued.

Key figures indicate that there are significant challenges for single income individuals trying to obtain a mortgage loan. In fact, the value lent to this demographic saw a significant 10% decrease between 2022 and 2023.

The decline in single income loans highlights a significant disadvantage for single buyers or those where there is only one breadwinner in the household, indicating potential affordability issues in the housing market.

In contrast, joint income loans saw a 7% increase between 2022 and 2023, maintaining consistently higher figures compared to single income loans throughout 2023.

The law firm - Bird & Co - says this evident favouritism in lending conditions leaves a significant portion of prospective single buyers facing uncertainty or severely limited buying options.

In addition, loans to individuals with impaired credit histories decreased by 4% between 2022 and 2023, contrasting with a 9% increase the prior year. This suggests lenders are exhibiting more caution as the economy struggles to get back on track.

Compounding this, the value of loans in arrears doubled from 2022 to 2023, reaching over £51m – a figure which has not exceeded £30m in the previous five years or more.

Daniel Chard, partner at Bird & Co, says: “The struggles of single income households, coupled with the decrease in loans to individuals with impaired credit histories, underscores the tightening lending criteria and the potential hurdles faced by certain segments of the population in accessing property finance.

“The trends shown in the statistics could exacerbate difficulties for future borrowers, as they navigate a process where access to credit becomes increasingly selective, impacting their ability to secure loans and fulfil their property aspirations.

“In light of these presented challenges, it's important for individuals aspiring to secure a mortgage to adopt proactive measures to enhance their eligibility and improve their chances in this competitive market, especially maintaining a clean credit history.”