Rejected mortgage applications rise by over half

Tighter lending conditions have seen rejected mortgage applications increase by 60 per cent.

In the past six months industry figures have shown that the number of rejected mortgage applications has risen from 463,000 to a shocking 738,000.

Since August 2006, the uk consumer has seen five Bank of England interest rate increases, with two taking effect since May 2007 and the Bank Of England base rate has increased from 4.5 per cent to 5.75 per cent, which has had the effect of adding around £1,320 to the annual cost of a typical £150,000 variable rate mortgage.

The industry research has shown that of the 738,000 people who had mortgage applications rejected in the six months up until the beginning of October 2007, applicants aged between 25 and 34 were worst affected. Around 4% of people in this age bracket have had an application turned down.

Mark Leaper of Moneymatchmaker.com, said: “Being or becoming a homeowner in the UK is really hard going at the moment if you are looking for a new mortgage. The financial climate is far more demanding than it was 6 months ago, lenders are more wary and potential new applicants need to be far more prepared for rejection than they have done for years.

Leaper went on to say “at this time last year, house prices were significantly lower, making it tougher to become a homeowner, so it comes as no great surprise that the Council of Mortgage Lenders has reported that the number of first-time buyers on the market is dwindling.

“With so many mortgage applications being rejected, which won't just be being fuelled by first time buyers, anyone looking to remortgage should take care and use companies like Moneymatchmaker.com who provide a one stop shop for mortgage comparisons. Remember, to many failed credit applications will affect your credit rating, applying with us is sipmle and involves one application to source the market to find the best possible mortgage deals.

Uk Mortgage lenders are being very cautious during these tough times and are looking to limit their risk wherever possible. They need to make sure that potential borrowers can meet the repayments for their new mortgage and that they satisfy all of the criteria to become a new customer.