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Fear of rejection barrier to mortgage application for ‘non vanilla’ customers

Paloma Kubiak
Written By:
Paloma Kubiak

Three quarters of self-employed, those who have a blip in their credit history or have no credit record at all have made the decision not to apply for a mortgage due to fear of rejection, research revealed.

Other reasons for not applying for a mortgage included the pressure of the application journey and concerns over how the process would impact their credit score, both cited by 23% of those who took part in the survey.

Over three quarters (78%) of those who have traditionally struggled to secure a mortgage would describe their financial situation as secure; while just over a fifth described their current financial situation as not secure.

Bluestone, which conducted the survey, said the respondents faced other financial challenges, with half of the respondents convinced they had less financial choice than others because they didn’t fit mainstream lender criteria.

Nearly half said they felt that financial organisations did not understand their situation, increasing to 85% among those who have missed a payment that affected their credit score.

Steve Seal, chief executive of Bluestone Mortgages,  said: “It is concerning that so many people in the UK have made the conscious decision not to apply for a mortgage due to the fear of being rejected, despite being in a financially secure position. This is a result of people with different financial circumstances being negatively labelled and deemed ‘unlendable’ by the mainstream mortgage market.

“Looking ahead we will see a growing cohort of people who do not fit traditional lending criteria due to the financial impact of Covid-19 and the rising cost of living, and it is vital that these individuals do not give up on their homeownership dream when mainstream lenders’ computers say no.”

“It is important to remember that there is help at hand and this is where the specialist lending market has a crucial part to play. With their individual approach to underwriting, these lenders can assess customers on a case by case basis and provide them with an opportunity to get onto the housing ladder. However, many people are often unaware of the options available to them, especially if they have been turned away. It is therefore the responsibility of high street lenders to signpost these customers to the available options, to ensure that they can make their homeownership dream a reality.”