Mortgages: rejections up
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Mortgage rejections up 60%
Monday, 15 Oct 2007 13:16
Over 738,000 mortgages applications were rejected in the last six months – a rise of 60 per cent.
New research from MoneyExpert.com reveals higher interest rates and banks tightening their lending criteria are now starting to take effect.
"Life is tough at the moment if you're applying for a mortgage. The financial environment is far more stringent than in the summer of last year and people need to be prepared for rejection," said Sean Gardner, chief executive of MoneyExpert.
Buyers aged 25 to 34, most likely to be first-time buyers, were facing most rejections.
"With so many applications being rejected it's unlikely that only first-time buyers are being affected," said Mr Gardner.
"Anyone looking to remortgage should apply with caution and take professional advice if they’re unsure - too many failed applications could affect your credit rating."
The Bank of England's five interest rate rises since August last year now mean the annual cost of a £150,000 variable rate mortgage has increased by £1,320 .
"Lenders quite reasonably do not want to take risks when there are pressures on how much people can afford, so it's up to the applicant to convince their bank that they can cope with the repayments," Mr Gardner explained.
Figures from the Council of Mortgage Lenders show lending in August for house purchase and remortgage have declined by 11 per cent and 12 per cent respectively.