In previous years, mortgage affordability was largely driven by income, debts and credit history. Provided your numbers broadly stacked up, lenders rarely examined your day-to-day spending in detail. But 2025 is a different landscape. With stubborn inflation, higher living costs and tighter regulatory oversight, lenders now look far more closely at how borrowers manage their financial lives—right down to the patterns revealed by everyday transactions.

This shift is driven by one key objective: understanding not only what you earn, but how much of it is consistently committed. Subscriptions, childcare, discretionary spending, school fees, informal loan repayments, and lifestyle habits all contribute to a lender’s overall view of affordability. Open Banking has accelerated this trend by giving lenders deeper visibility into real-world behaviour, and buyers who underestimate this step often face reduced loan amounts or unexpected declines.

For clients working with Willow Private Finance, this issue arises frequently. The impact of spending patterns was one of the themes in our blog on how mortgage valuations work, because expenditure levels feed into how lenders perceive risk. It also connects with our guidance on joint vs single mortgages in 2025, where combined household spending can materially change borrowing power.

This article explains how everyday spending is assessed, what lenders look for, why it matters more than ever in 2025, and what buyers can do to prepare—without resorting to unrealistic lifestyle changes or panicked cost-cutting.

Why Lenders Care More About Spending in 2025

Affordability rules are shaped by a regulatory environment that demands prudent lending, sustainable repayment capacity and resilience under stress. With interest rates showing unpredictable movements and living costs still elevated, lenders cannot rely solely on stated income. They need to verify how much disposable income remains after essential and recurring spending.

This means that modern underwriting is no longer focused only on debts or credit scores. Instead, lenders analyse trends: how you spend money, how consistent your discretionary outgoings are, and how much of your income is committed before you even think about a mortgage repayment.

Open Banking has made this scrutiny possible. When borrowers consent to share bank data, lenders can view spending behaviour across months, not just snapshots. It helps them calculate whether borrowers can manage mortgage payments not only at today’s rates but under potential future stress tests. This is particularly important in 2025, as many lenders have reinstated higher stress rates for affordability due to longer-term uncertainty.

The intention is not to judge lifestyle choices but to determine whether they compromise ongoing repayment capacity. In other words, lenders need reassurance that your spending will not restrict your ability to react to rising bills, childcare needs, or temporary income changes.

How Lenders Analyse Your Spending: A Modern Approach

When lenders review bank statements, they do not simply skim-read them for anomalies. Instead, they evaluate how your financial life behaves in practice. They look at fixed commitments, regular patterns and discretionary choices. While each lender approaches this slightly differently, the themes are consistent.

Fixed financial commitments
These include rent, school fees, car payments, childcare arrangements, and standing orders. These expenses reduce future mortgage affordability because they are considered immovable. If you spend £1,500 per month on school fees or £800 on childcare, lenders will deduct this from your disposable income before calculating loan size.

Recurring lifestyle spending
This includes subscriptions, memberships, food delivery apps, regular entertainment spending and predictable monthly habits. Lenders are particularly focused on spending that persists consistently across months. One expensive month may not matter, but a pattern does.

Transactional behaviour
Lenders look at how you manage cash flow: whether accounts are frequently overdrawn, whether balances dip dangerously low before payday, and whether your saving habits are consistent. Even borrowers with high incomes can impact their affordability if their accounts show poor housekeeping.

Irregular or unclear payments
Payments to friends, informal loans, overseas transfers or repeated cash withdrawals often prompt lenders to ask questions. They want to confirm whether these transactions are commitments that need to be factored into affordability.

In the past, many of these details were overlooked. In 2025, they form part of the core underwriting process for many lenders, especially those with more meticulous affordability models.

Subscriptions and Digital Spending: Small Costs With Big Impact

Subscriptions are one of the main culprits reducing borrowing power without buyers realising it. The rise of digital services—from streaming platforms to fitness apps—means households now hold multiple recurring payments that lenders treat as essential monthly commitments.

Even if you think of them as discretionary, lenders often consider them fixed outgoings because they recur automatically. A typical household can easily have £150–£300 a month in subscriptions, and when affordability is tight, this can reduce the loan amount a lender is willing to offer.

Food delivery apps, online shopping memberships and recurring top-ups add further weight to a lender’s affordability model. These habits create predictable spending patterns that lenders cannot ignore.

While buyers should not feel compelled to cancel essential services, they must understand how recurring payments influence the way lenders calculate sustainable repayment capacity.

School Fees and Childcare Costs: The Largest Affordability Constraint

School fees and childcare costs represent some of the most significant affordability pressures in 2025. Lenders treat these as non-negotiable long-term commitments. Parents who pay for nursery, after-school clubs or private school fees are likely to see borrowing capacity reduced more sharply than borrowers without dependants.

Lenders also look at how long these commitments are likely to continue. A child aged three suggests many more years of nursery or early-school expenses, while a teenager near adulthood may impact affordability less severely. These time horizons shape how conservative lenders are when determining risk.

This means that applicants with high incomes can still find themselves limited by household spending, especially where both parents work and childcare represents a major proportion of monthly outgoings.

Lifestyle Spending: Why Discretionary Costs Matter More Than Before

Discretionary spending—restaurants, travel, entertainment, holidays, luxury purchases—does not automatically disqualify a borrower. Instead, lenders want to determine whether such spending is habitual. If your statements show consistent spending at a certain level, lenders assume these costs will continue. This reduces the amount of income available to support a mortgage repayment.

The rise of inflation in recent years has also led lenders to reassess what discretionary spending really means. Something that appears discretionary at first glance—such as gym memberships, after-school clubs or personal care services—may in reality be part of a borrower’s lifestyle. Lenders use patterns to decide whether these costs should be factored in.

The key point is not that borrowers must reduce their quality of life, but that they must understand how patterns shape underwriting outcomes.

Where Borrowers Go Wrong: Misunderstanding How Lenders Interpret Spending

Many buyers assume affordability is based purely on salary, existing debts or a lender’s online calculator. When the real application is processed, they are shocked at the difference between the calculator’s result and the lender’s decision.

Online tools rarely account for spending habits.

Buyers also often believe that individual transactions matter less than overall income, but lenders evaluate consistency. A once-off expensive month can be ignored, but a pattern of high discretionary spending will not be.

Another common mistake is assuming that lenders will ignore spending leadership if income is high. Even affluent buyers face affordability reductions if their spending habits show that most of their income is already committed.

This is why early preparation and a broker-led assessment make such a meaningful difference.

Preparing for a Mortgage in 2025: What Really Helps

Borrowers can take several practical steps months before applying. Tidying financial behaviour over time helps create a clear and sustainable pattern that aligns with lenders’ expectations.

The first step is understanding your real monthly spending. Many borrowers underestimate their outgoings by several hundred pounds. The second step is reducing avoidable recurring payments—not through drastic changes, but by removing services you no longer use. Finally, ensure your accounts are managed well: avoid dipping into overdrafts, maintain healthy balances near payday, and build a consistent savings rhythm.

These behaviours help present a stable financial profile, allowing lenders to feel comfortable offering the highest possible loan amount.

For more structured preparation, our guide on how to prepare your credit file for a mortgage in 2025 provides useful long-term steps.

Hypothetical Scenario: When Spending Reduces Borrowing Power Unexpectedly

A recent borrower approached Willow Private Finance seeking a mortgage that comfortably fit their high salary. On paper, the application appeared straightforward. However, the couple had consistent monthly spending on childcare, private tuition, luxury travel, and multiple subscription services. Once the lender’s affordability model factored these in, their loan amount was reduced by almost 20%.

By reorganising accounts, adjusting recurring payments and planning strategically, we were later able to place the case with a lender that adopted a more holistic approach. This demonstrates how spending patterns—not income alone—now shape mortgage outcomes.

Outlook for 2025 and Beyond

Affordability assessments will remain stringent. With economic conditions still fluctuating and lenders under pressure to maintain responsible lending practices, granular expenditure analysis will remain central to underwriting. Digital banking tools will only make spending scrutiny faster and more precise.

Borrowers who recognise this shift early will be better prepared to secure the strongest possible outcome.

How Willow Private Finance Can Help

Willow Private Finance provides lenders with a fully structured, pre-assessed financial profile that anticipates affordability challenges before the application is submitted. We understand how different lenders treat spending, which ones use more sophisticated affordability models, and which adopt a more flexible view of transactional behaviour.

For clients with school fees, childcare costs, irregular income or significant discretionary spending, we position applications in a way that gives lenders full clarity and confidence. Our whole-of-market access ensures we match borrowers with lenders whose affordability calculations reflect their real-world financial picture, not a rigid formula.

Frequently Asked Questions

Q1: Do lenders really analyse subscription spending now?
Yes. Subscriptions form part of recurring monthly outgoings and reduce disposable income, which affects affordability.

Q2: Will high childcare costs reduce my borrowing amount?
Almost always. Lenders treat childcare and school fees as long-term commitments and adjust affordability downward accordingly.

Q3: Does discretionary spending matter if I earn a high salary?
Yes. Lenders look at patterns, not just income. Consistent high spending affects how they assess sustainable repayments.

Q4: Should I cancel subscriptions before applying?
You should remove unused services, but lenders care more about consistent patterns than last-minute adjustments.

Q5: Do lenders check every transaction?
They analyse trends and categories rather than individual purchases, but repeated or unclear transactions may prompt questions.



Q6: How far back do lenders look?
Most lenders review three to six months of bank statements, though some use Open Banking to analyse patterns in more detail.

📞 Want Help Navigating Today’s Market?

Book a free strategy call with one of our mortgage specialists.

We’ll help you find the smartest way forward—whatever rates do next.