Half of first-time buyers rejected for a mortgage
Nearly half of prospective first-time buyers have been rejected for a mortgage, according to Aldermore.
The bank found that over a third (35%) say they have been rejected once for a mortgage, and a further one in 10 have been turned down more than once.
The situation has got worse for first-time buyers in 2020, as the effects of the global pandemic have impacted their finances as well as lending criteria.
Why can’t first-time buyers get a mortgage?
The most common reason for rejection is being self-employed or a contract worker (20%). This is a big change compared to the pre-lockdown market when it was only the ninth most common reason for an application being declined.
As a result, nearly a quarter (23%) say they have given up being self-employed to secure a mortgage.
Other top reasons for prospective first time buyers being turned down for a loan include deposit size (18%), salary intake (16%) and poor credit history (15%). Nearly a quarter (23%) of first time buyers admit they are worried about their credit history and a third (34%) are currently actively looking to improve their score.
Six in 10 (62%) say buying their first home simply feels unachievable at the moment.
Jon Cooper, head of mortgage distribution at Aldermore, said: “A decline for a mortgage can be a deflating experience for those looking to fulfil their dreams of home ownership, but do not despair as options for first time buyers and the self-employed have broadened over the past decade.
“The growth of specialist lenders, who can handle more complicated applications, have allowed for credit issues to not be as much of a significant barrier to buying a home as it was before.”