A fifth of potential borrowers have had their mortgage application rejected over the past 12 months – hitting their hopes of buying a home - research claims.
Despite cost-of-living pressures and record-high mortgage rates, demand for homeownership remains steady with a third of those aged 18-34 years old aiming to secure a mortgage.
But a survey by specialist lender Together found 23% of mortgage applicants have been rejected this year.
A quarter of the rejections were from people using the Help to Buy or Shared Ownership schemes, while 29% struggled due to having a county court judgement on their record.
There is also a significant emotional toll from being rejected. Among those who had been turned down, 32% say the result left them feeling worried for their future, 26% said it made them depressed and 23% said they felt like a failure.
Pete Ball, personal finance chief executive at Together, said: “It is imperative that the mortgage market works towards becoming more inclusive, especially as today’s the cost-of-living crisis will likely have a long-term impact on our financial wellbeing.
“As the cost-of-living crisis shows no signs of letting up, we anticipate the proportion of those with adverse credit is set to rise in the immediate-term.
“We will see more potential borrowers being overlooked by some mainstream lenders because of factors such as missing a bill payment on a credit card or another type of unsecured loan. These credit blips may date back years – or be something the applicant is completely unaware exist – but can have repercussions on their ability to successfully apply for a mortgage.
“Our research into the mortgage market highlights the growing need for specialist lenders to help remedy the issues faced by borrowers who are categorised as ‘non-standard’ or with adverse credit. However, a longer-term plan must be put forward and supported by the Government to address the issues facing potential borrowers today.”
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