Numbers expected to grow with high inflation and cost-of-living
Almost one in four (23%) traditionally underserved customers are turned down for a mortgage, new research from Bluestone Mortgages has revealed.
Non-vanilla customers who were turned down for a mortgage application were most likely to be rejected by high street banks (84%), followed by their main bank (23%). However, nearly nine in 10 (88%) of these lenders then provided further advice on how to secure a mortgage, with the most popular advice being to recommend a different lender (82%).
Over one in 10 (13%) lenders recommended a mortgage broker, and following this recommendation, almost all (98%) were then able to secure a mortgage.
The survey found that, overall, around two-fifths (44%) of underserved customers – including self-employed and those who have a blip in their credit score or no credit score – have been turned away by high street lenders for financial products and services.
A third (33%) have been turned down for credit cards, and over one in 10 (12%) were not granted loans.
Those who have missed a payment that has impacted their credit score are most likely to have been turned down for a financial product or service (85%), compared to 28% for the self-employed.
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The research also showed that younger would-be borrowers are more likely to be turned away by lenders, with more than three-quarters (77%) of those aged 18-34 having experienced being turned down, compared to 55% for those aged 35-44, and 13% for those aged 55 and above.
Steve Seal, chief executive at Bluestone Mortgages, said that in an environment where inflationary pressures continue to mount and the cost-of-living is rising, the number of customers who do not fit the “vanilla” profile is only set to grow.
“What is crucial, is the fact that those who have been rejected by a high street lender or their main bank have been able to secure a mortgage once directed to an alternative lender who suits their borrowing needs,” Seal noted.
He said that this demonstrates the importance of signposting, and that the mortgage industry, as a whole, has a vital role to play in this.
“Our message to borrowers is don’t give up on your dream, there are options out there to help ensure each and everyone has equal access to homeownership,” Seal added.
The research was undertaken by Opinium between December 02 and 09, 2021 among 1,003 UK adults who are either self-employed, have a blip in their credit score, or those who have no credit score.
