Increase in level of rejected mortgage applications
According to recent figures the level of mortgage applications that are being rejected in the UK have shot up over recent months.
New figures show that the level of rejected mortgage applications has soared by around 60% over the past six months, reflecting the effects of the interest rate rises coupled with volatile financial markets. In the first half year to October around 738,000 applications for home loans were rejected according to the figures.
This reflects a rise of just under 60% compared to the previous six months, and shows the difficulties that many consumers are having when it comes to getting finance to purchase a property. Tougher lending criteria from lenders, the effects of the credit crunch in the UK and globally, and the effect of five interest rate rises since last August have all contributed to the rising level of mortgage application rejections according to many experts.
Rising bad debts and increased inter-bank lending charges have resulted in banks and lenders having to really tighten up on their lending criteria, which has made it increasingly difficult for many people – particularly those with bad debts – to take out a mortgage. Experts are warning those that do have their mortgage applications rejected should refrain from making further applications right away, as this can further damage their credit.
One industry official stated: "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. 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."
13th November 2007