First-time buyers had a better change of getting their mortgage application approved before the pandemic according to a survey from mortgage lender, Aldermore Bank. The latest figures are a massive decrease compared to the previous year when almost half of first-time buyer applicants said they were successful.
The most common reason for first time buyer mortgages being turned down was a poor credit rating. 39% of rejections did not have a large enough deposit and 33% had employment issues such as furlough and redundancy since the pandemic began.
The increase in FTB mortgage rejections goes some way to explain the huge soar in demand currently being experienced in the rental market. As house prices continue to increase it can take first time buyers longer to save their deposit, which leads to more demand for rental property.
External factors contribute to this as well. Nobody could have predicted the pandemic and in times of financial and employment uncertainty, lenders become more risk adverse. This leads to more mortgage applications being turned down and an increase in would be homeowners in the rental sector.
First time buyers should not become disheartened. There is still plenty of applications being approved and often simple changes to the application can make all the difference. We would always recommend speaking to a professional mortgage advisor prior to submitting a mortgage application. They will help you to set a property budget that is likely to be accepted by lenders and guide you through the entire process.
M A S O N S is one of Hertfordshire’s leading lettings agencies. We offer an award-winning letting experience for landlords through highly flexible and quality property management services covering Hitchin, Letchworth, Fairfield Park, Stotfold, Biggleswade, Stevenage, Welwyn Garden City and Hatfield.