Mortgage rejections increase fourfold

Thu, 16 Apr 2009

According to recent data from the mortgage market, one in ten mortgage applications that meet lender criteria are still being rejected. As many as 9 per cent of these transactions are rejected compared to just 2.3 per cent in 2007, according to the website moneysupermarket.com.

In many ways, mortgage lenders may be actively avoiding borrowers that they perceive as still posing risk, despite matching criteria. This tightening of mortgage lending has been caused by the economic crisis.

The head of mortgages at moneysupermarket.com, Louise Cuming, reportedly commented: " 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 reportedly continued: "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."
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