"While it’s positive that the proportion of those rejected for a mortgage has fallen over the last five years, challenges remain, and the emotional toll is still of great concern."
- Ryan Etchells, chief commercial officer at Together
Thousands of UK mortgage applicants are facing the mental and emotional toll of being locked out of the mainstream market, new research from Together suggests.
Back in 2022, in the aftermath of the Covid crisis, 19% of non-standard mortgage applicants said they had been rejected in the past five years.
Two years on, Together’s new research reveals that 7% are still struggling to secure a mortgage.
This could be for those wishing to buy a property under the shared ownership scheme, or who may be denied access to finance because of their age, employment situation, impaired credit history or a combination of these factors.
For example, two in five (39%) of potential borrowers attempting to get on the housing ladder said their mortgage application had been rejected because they were buying through shared ownership.
Nearly a third (29%) were denied due to having a thin or impaired credit history and 27% said this was due to them being over 55 or divorced, while 22% said this was due to being self-employed.
And the stress of rejection because of these factors is impacting on applicants’ emotional health. A quarter of ‘non-standard’ applicants who have tried to get a mortgage have felt stressed or upset at times during the process. 14% of this group have also felt judged when trying to get a mortgage - rising to almost a quarter (24%) of those with thin or impaired credit.
More than one in ten (12%) of non-standard applicants who have tried to get a mortgage have had sleepless nights trying to get on the ladder, and this rises to 19% among those using schemes like shared ownership to buy their home. Some have even given up on their housing ambitions altogether, with 5% of applicants wanting to buy a non-standard property (including a holiday home, park home, thatched cottage or property made from wood, concrete or steel) going back to renting.
When asked what they found challenging when applying for a mortgage, 32% said it was the time spent gathering information for the application and 17% said it was too difficult or time consuming to meet all the requirements for a successful application.
Ryan Etchells, chief commercial officer at Together, commented: “Life and work as we’ve known it is evolving and there are now more of us who don’t comply with the ‘one size fits all’ lending methods of what worked for previous generations. And, while it’s positive that the proportion of those rejected for a mortgage has fallen over the last five years, challenges remain, and the emotional toll is still of great concern.
“In order to support more people with their property ambitions, we need to work in step with the wider industry to make the application process as seamless as possible, and continue to challenge the outdated systems, processes and stereotypes which are responsible for many of the access barriers that exist.
“Chancellor Rachel Reeves’ Budget in October saw the important task of cementing plans for the Affordable Homes Schemes and house-building efforts from next year. But what’s missing is Government intervention at industry level to reassess exactly how to bridge the issue of affordability and home ownership in the UK whilst specialist lenders look to continue to support those that are locked out of home ownership by a broken mainstream mortgage market.”
