In regards to mortgage lending, what does 'probability of income continuation' generally assess?

The concept of 'probability of income continuation' in the context of mortgage lending specifically evaluates the likelihood that a borrower will maintain their income over time. This assessment is particularly crucial for lenders when determining a borrower's ability to repay a mortgage.

Future earning potential takes into account various factors, including the stability of the borrower's current job, market conditions in their field, recent trends in the economy, and career trajectory. By analyzing these elements, lenders can get a clearer picture of whether a borrower is likely to continue earning at a level sufficient to meet mortgage obligations throughout the duration of the loan.

While household income levels, job security, and count of income sources can all play a role in assessing a borrower's financial situation, they do not directly address the broader implication of long-term income sustainability that is critical for lenders when making decisions about extending credit.