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A third of first-time buyers accepted for mortgage on first try

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Written by: Anna Sagar
13/12/2021
Just over a third (35%) of first-time buyers are accepted for a mortgage on their first try, down from about half (48%) in March last year before the pandemic.

According to Aldermore’s first-time buyer index, a survey of 2,015 prospective first-time buyers, about 45% of prospective first-time buyers were rejected for a mortgage once, and another 20% said there were rejected multiple times.

Poor credit history was the main reason followed by administrative error, with 21% citing these factors respectively. Not having a large enough deposit came third at 20%.

Credit history was cited as a big concern by more than a quarter of first-time buyers, with two in five saying that improving their credit score would improve their chance of securing a mortgage.

Around one in five said that they feared that their credit rating had deteriorated since the pandemic started.

The most popular credit issues cited included overdraft with 29%, student loans at 24%, missed bill payments and employment gaps coming to 21% respectively.

Around one in nine said they had taken out a payday loan, and 7% had a County Court Judgement and 6% have experienced bankruptcy in their past.

Employment disruption impacted about half of prospective first-time buyers since the start of the pandemic, which heightened concerns around credit and borrower’s ability to secure a mortgage.

More than a third surveyed were put on furlough but had returned to work, but 9% said they were still on furlough currently.

About 5% said they had lost income or been made redundant since the onset of the pandemic.

Other factors, which all were below 20%, included taking out a payday loan, being self-employed, having irregular income, not always living in the UK, having a large amount of debt, too many credit applications, not being on the electoral roll and not earning enough.

Jon Cooper, head of mortgage distribution at Aldermore, said: “It’s easy to see from the research why many first-time buyers can feel disheartened by the challenges when looking for their first home. They shouldn’t despair though as there are many options open to them.

“Specialist lenders, like Aldermore, are opening up the market to those with complicated income streams or past credit issues ensuring that no borrower, whatever their background, feels excluded from the opportunity of getting on the housing ladder.

“I would also recommend getting help from a broker, which can be a great boost in navigating the many pitfalls and confusing processes. They provide a whole of market view and cut through the jargon to provide options specific to a new buyers’ individual circumstances.”

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