Worryingly, the figures are considerably down from the 48% that were able to get their mortgage on the first attempt before the pandemic, with research showing that growing numbers are struggling to secure a mortgage as conditions created by Covid-19 continue to bite.
Aldermore’s research highlighted the significant levels of mortgage rejection that prospective first-time buyers are currently experiencing. 45% of prospective first-time buyers say they were rejected for a mortgage once, and a further 20% say they were rejected for a mortgage more than once.
Credit history main reason for rejection
The main reason for a rejected mortgage application was that the prospective first-time buyer has poor credit history (21%), followed by an administrative error (21%) and not having a large enough deposit (20%).
Many first time buyers experience employment disruption
49% experienced disruption to their employment since the pandemic began increasing fears of credit issues and difficulty securing a mortgage.
35% were put on furlough but are back working now, 9% are still on furlough currently, and 5% have either lost income or been made redundant since the pandemic began. Future financial stability remains an ongoing stress as two in three (62%) say they’re worried about their current financial situation.
Overcoming challenges to secure a mortgage deal
26% of prospective first-time buyers say credit history is a big concern, with 36% looking to actively improve their credit score to increase their chances of securing a mortgage. 19% now worry that their credit rating has gotten worse since the Covid-19 outbreak.
Credit issues prospective first-time buyers have experienced are wide-ranging with the main barriers affecting applying for a mortgage include having an overdraft (29%), student loans (24%), missed bill payments (21%) and a gap in employment (21%). There is also a noteworthy proportion that have more significant credit issues with one in nine having taken out a payday loan (13%), 7% having a County Court Judgement (CCJs), and 6% having a bankruptcy in their past.
