New data suggesting that only a third of first time buyers are able to secure a mortgage at their first attempt may indirectly explain why demand in the rental sector remains so strong.
Data from a study conducted by the Aldermore Bank shows that just 35 per cent of FTBs were able to get a mortgage on the first attempt, considerably down from the 49 per cent before the pandemic.
Over a quarter of prospective first time buyers are worried about their credit history and a third are currently actively looking to improve their score.
Some 49 per cent of FTBs have experienced disruption to their employment, such as furlough or redundancy, since the pandemic began, and two in three are worried about their current financial situation.
Aldermore bank’s First Time Buyer Index – a survey of 2,015 prospective first time buyers – reveals many are struggling to secure a mortgage as conditions created by Covid-19 continue to bite.
Jon Cooper, head of mortgage distribution at Aldermore, says: “It’s easy to see from the research why many first time buyers can feel disheartened by the challenges when looking for their first home.
“I would also recommend getting help from a broker, which can be a great boost in navigating the many pitfalls and confusing processes. They provide a whole of market view and cut through the jargon to provide options specific to a new buyers’ individual circumstances.”
|
Reason for mortgage application getting rejected |
% |
|
Poor credit history |
21% |
|
An administrative error |
21% |
|
I didn’t have a large enough deposit |
20% |
|
I’d taken out a payday loan |
18% |
|
I was self-employed, have irregular income or a contract worker |
17% |
|
I haven’t always lived in the UK |
17% |
|
I had a large amount of debt |
17% |
|
I’d made too many credit applications |
15% |
|
Me/my partner was not on the electoral roll |
14% |
|
Me/ my partner were not earning enough |
14% |
|
Credit issues |
% |
|
Used my overdraft |
29% |
|
Had a student loan |
24% |
|
Missed bill payments |
21% |
|
Had a gap in employment |
21% |
|
Been responsible for dependents (e.g. children) |
21% |
|
Been in credit card debt |
21% |
|
I have had gambling transactions on my history |
13% |
|
Taken out a payday loan |
13% |
|
Any account handled by collection agencies |
9% |
|
Had a County Court Judgement (CCJ) |
7% |
|
Been declared bankrupt |
6% |
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