‘Non-vanilla’ customers turned down for mortgages, claims study

New research from Bluestone Mortgages has shown that 'non-vanilla' customers are being turned down for financial products and services.

More than two fifths (44%) of those traditionally underserved by high street lenders, including the self-employed, those who have a blip in their credit score or no credit score at all, have been turned away.

Meanwhile, a third (33%) have been turned down for credit cards, a quarter (23%) for mortgages, and over one in 10 (12%) for loans. 

The most likely to have been turned down for a financial product or service (85%) are those who have missed a payment that has impacted their credit score, compared to 28% for the self-employed.

The survey found that younger prospective borrowers are also more likely to be turned away by lenders, with over three quarters (77%) of those aged 18-34 experiencing being turned down, compared to 55% for those aged 35-44 and 13% for those aged 55 and above. 

According to the research, carried out by Opinium in December on 1,003 adults, non-vanilla customers who were turned down for a mortgage application were most likely to be rejected by high street banks (84%), followed by their main bank (23%).

On a more positive note, nearly nine in 10 (88%) of these lenders then provided further advice on how to secure a mortgage. The most popular advice was to recommend a different lender (82%), while 13% recommending a mortgage broker. Following this recommendation, almost all (98%) were then able to secure a mortgage. 

“It’s discouraging to see just how many people are being turned down for financial products and services. In an environment where inflationary pressures continue to mount and the cost of living is rising, the number of customers who do not fit the ‘vanilla’ profile is only set to grow,” Steve Seal, chief executive at Bluestone Mortgages, said.

He added: “What is crucial, is the fact that those who have been rejected by a high street lender or their main bank have been able to secure a mortgage once directed to an alternative lender who suits their borrowing needs.”

“This demonstrates the importance of signposting, and the mortgage industry as a whole has a vital role to play in this. Our message to borrowers is don’t give up on your dream, there are options out there to help ensure each and everyone has equal access to homeownership.”