Mortgage lenders are increasingly looking at factors such as existing mortgage payments and a borrower's ability to repay when assessing how much to lend homebuyers.

Moneyfacts said that with house prices rising and some stiff competition in the mortgage market, many lenders were moving away from traditional income multiples as a way of working out affordability.

Many were using 'ability to repay' applications, where each case was given an income and expenditure assessment, taking into account existing mortgage payments, credit agreements and contractual commitments.

While affordability was taken account of in all applications, this often came at a later stage in the process, often at agreement in principle, they said.

Some lenders use a more sophisticated form of income multiple, which offers higher multiples for those who are on larger salaries, in a professional occupation or borrowing at a lower loan-to-value.

Moneyfacts said that research by the company had found that five of the ten top mortgage lenders were now using 'ability to repay' rather than income multiples when determining how much they were going to lend.

However, different lenders were using different criteria, making it less transparent for the applicant and increasing the risk of applicants damaging their credit rating by applying for a loan that was declined, they said.

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