Mortgage Rejections increase by 400% in 2 Years

Almost 1 in 10 vetted mortgage applications are rejected according to a survey conducted by moneysupermarket.com. These applications see candidates meeting all the necessary lending criteria outlined by the bank or building society offering the mortgage, however candidates are still being rejected on the basis of minor issues.

Lending criteria in the current climate often means that first time buyers must find a minimum of 10% of the value of the home as a deposit and the majority are required to stump up around 25%. Finding a mortgage deal at anything more than 85% LTV is difficult, according to Matt Andrews of Money Workout, the mortgage broker. Although many buyers are finding the money to fund a deposit, they are still being rejected for mortgages on the basis of other criteria, including any fault on their credit history.

As vetted mortgage rejections have increased from just 2.3% in 2007 to almost 9% in 2009, the statistics provide a worrying insight into the nature of the mortgage market, where those who are suitable for approval are being rejected for minor reasons.

Louise Cuming, head of Mortgages at Money Supermarket recognised that lenders are increasingly considering any minor ‘blemish’ on an applicant’s credit history; pointing out that the details of all applicants missed loan or credit card repayments will factor into mortgage approval. All missed payments are kept on record for 6 years and will affect mortgage applications. However, Cuming says that even those with completely clean credit histories are being rejected for mortgages.

The difficulty of obtaining a mortgage, whether as a first time buyer or as a current homeowner, is another problematic factor in the struggling housing market. Without mortgage approvals, buyers cannot join or rejoin the market, leading to slowdown in house sales and many sales falling through.

For those wishing to sell property fast, any stumbling block in the property market puts a setback on getting property sold. As a result of significantly fewer people within the property buying market, the slowdown is cause for concern for struggling homeowners wishing to release the equity from their home and either downsize or rent. For those homeowners who need an equity release solution, Swift Capital may be able to help. At Swift Capital we offer a variety of equity release solutions including the possibility to sell your home to us.