Huge increase in mortgage rejections
The number of mortgages that are being rejected has increased by around four times, according to a national newspaper report. It is said that despite the fact that these mortgage applications fit with the lenders’ criteria on paper, an increasing number of lenders are still finding reasons to turn them down.
The number of rejections for this year is said to be 9 percent of already vetted applications and this compared to just 2.3 percent in 2007.
One industry official said: “Lending criteria has become too strict – even vetted applications that we would expect to be accepted without a hitch are being rejected. Credit histories play an important part in the process and any blemishes will make finding a mortgage increasingly difficult. All debt repayments – credit cards, loans, store cards etc – must be made on time. Details of all missed repayments are held on your personal files for six years and may count against you when your credit rating is accessed.”
She went on to state: “Assessing affordability is key for lenders and everyone has to be much more realistic about what they can borrow. The most anyone can reasonably hope for is four times their salary – anything over this is more likely to be rejected. And you can’t expect lenders to take overtime or commission into consideration when they assess affordability, they are likely to base the maximum lending purely on your basic salary.”
Another official said: “Lenders are being extremely picky and getting a deal with more than 85pc LTV is very difficult. They may be advertising great rates on mortgages of 90pc LTV and above, but the reality is that most borrowers do not qualify – even if they have a clean credit score – as lenders have got very tight on criteria.”
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