They say that an Englishman’s home is his castle, but with mortgage lending hitting a 14 month low in September 2014, are we seeing a shift that means owning a home is fast becoming a pipe dream?
Some may say a decline in lending isn’t necessarily a bad thing: house prices have continued to rise way beyond earnings, and in a less financially secure economy it’s important that banks only lend to those who can really afford it.
But what about those who can afford it, who come prepared with earnings and a deposit well within requirements, but find that the computer still says no?
Unfortunately there is still a certain stigma attached to being denied any kind of loan, and those who have been refused a mortgage can be reluctant to make their voice heard. Since stricter rules have come into place more and more people are being turned down, but sometimes this is for reasons that appear to be more closely aligned to ticking boxes than evaluating suitability.
Refused a mortgage?
I’m not referring to cases where a review of an individual or their circumstances shows that they can’t afford the mortgage, or would be hard pressed to afford it in the future should their personal circumstances change, or interest rates rise. I’m talking about cases that we help applicants through regularly at Which? Mortgage Advisers which, to your average person, don’t seem to make sense, such as:
- First time buyers and home movers who already pay more per month on their existing mortgage or monthly rent than they would on their new mortgage, but are refused
- People who have become self-employed and now earn more than they did previously, but cannot remortgage or buy a new property
- Over 50s who have significant amounts of capital in savings and investments and can easily pay for a mortgage, but are denied
The reasons for rejections for the groups can be as seemingly minor as not being registered correctly on the electoral roll (a question of records being updated) to having missed a credit card payment. One of the most frustrating reasons, however, is not having bad debts, but not having debt at all: by not having a credit card you can be perceived as a bad credit risk.
Whilst its obviously important that mortgage lenders are careful who they choose to lend to, they should ensure that rules designed to protect the consumer are applied with not only transparency, but also common sense?
Have you ever been refused a mortgage for a seemingly unfair reason? Do you know of someone struggling to find a lender even though on paper they can easily afford the property?