Rejected - vast numbers of first time buyers turned down for mortgages

One one in five first time buyers have been able to get a mortgage on the first attempt over the past 15 months - a huge change from nearly half that were able to pre-Covid-19.

That’s one of the most startling findings of a survey of 1,000 FTBs by the Aldermore Bank. 

The survey also discovered that 38 per cent were rejected for a mortgage once, whereas 43 per cent say they were rejected for a mortgage more than once.

Prior to the pandemic some 36 per cent reported being rejected once and only 17 per cent said they had been rejected more than once.

The most common reasons for rejection are poor credit history and not having a large enough deposit.

Over a quarter of prospective first time buyers now say credit history is a big concern, with two in five looking to actively improve their credit score to increase their chances of securing a mortgage. 

The main credit-related barriers affecting first time buyers applying for a mortgage are having an overdraft, a gap in employment, student loans and credit card debt. 

There is also a noteworthy proportion that have more significant credit issues with nearly a quarter having an account handled by collection agencies, one in nine having taken out a payday loan, 12 per cent having a County Court Judgement and nine per cent having a bankruptcy in their past.

Jon Cooper, head of mortgage distribution at Aldermore, says: “The data shows that the pandemic has added to already challenging conditions for those trying to get on the housing ladder but first time buyers should not despair. 

Being declined for a mortgage, even though it can be a deflating experience, is not game over as options have broadened over the past decade. The growth of specialist lenders, that through human underwriting can dig into the detail of more complicated applications, have opened the door for those with complicated income streams or credit issues in their past to find a pathway to home ownership.”