A third of all UK mortgage applicants face rejection

A survey of more than 750 mortgage applicants in the UK has uncovered the trials and tribulations they have faced when applying for their loans.

It found:
  • 32 per cent of mortgage applicants faced at least one rejection from a lender
    • 44 per cent were rejected due to having an irregular income rather than a monthly pay-check (30 per cent were self-employed)
    • 33 per cent of those who were rejected for a mortgage already owned another mortgaged property at the time
  • 50 per cent of all UK mortgage customers relied on a broker to find their loan
  • 59 per cent feel mortgage providers need to be more flexible in assessing applications to take into account an individual’s full financial circumstances
  • 28 per cent are dissatisfied with the experience they have had with their current mortgage provider

One in three mortgage customers in the UK were rejected by lenders during the process of applying for loans, new research from KSEYE has found.

The bridging lender commissioned an independent survey of 752 UK adults, all of whom had applied for mortgages in the past five years. It found that 68 per cent were successful at their first attempt, while 32 per cent were rejected on at least one occasion.

Of those who were rejected by lenders, 44 per cent said it was due to having an irregular income rather than a monthly pay-check. Three in ten (30 per cent) were self-employed when rejected for a mortgage.

More than a third (36 per cent) of those who were turned down by a lender said that they were never told why their application had been unsuccessful. Almost half (46 per cent) had received an agreement in principle from a mortgage provider, only for the company to later reverse their decision.

According to all 752 mortgage customers surveyed, 50 per cent relied on a broker to find their loan. However, 28 per cent are dissatisfied with the experience they have had with their current mortgage provider.

KSEYE’s research also showed that 59 per cent of mortgage customers feel that lenders need to be more flexible in assessing applications to take into account an individual’s full financial circumstances.

Kynan Benjamin, head of underwriting at KSEYE, said:

“Given how busy and competitive the UK property market has been over the past 12 months, the mortgage industry has come under scrutiny. And understandably so, with our research highlighting just how difficult it can be for individuals to jump through the necessary hoops to secure a mortgage.

“Clearly, the inflexible application process that many lenders rely on is precluding some people from getting onto or moving up the property ladder. The self-employed, those working in the gig economy, and people with irregular sources of income are suffering the most.

“So, it is of little surprise that the specialist finance sector has seen an increase in applications in 2021. Those keen to purchase a property, particularly during the stamp duty holiday, have had to consider their options – for some, as the data shows, mortgages are not always viable, and so greater flexibility or a more bespoke option is required.”

 

Kindly shared by Property Wire

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