A study by specialist lender Together has found that borrowers are being let down by mortgage providers, with 54% of applicants denied for a loan for reasons that could be considered ‘normal’ by most people. The study also found Millennials and over-55s were especially likely to miss out.
The mortgage industry is failing to keep up with modern borrowers’ needs, it has been claimed, after a new survey revealed more than half were rejected for lifestyle choices including being self-employed or buying a converted home.
A study of the market, commissioned by Specialist lender Together, found a huge percentage of mortgage applicants – 54% who’d fallen out of the application process – had been denied a home loan for reasons that could be considered ‘normal’ by most people.
These included factors once believed to be ‘non-standard’ such as their employment type; they could be self-employed, a contract worker or take a dividend, or the type of property they were looking to buy, including conversions or high-rise flats.
Pete Ball, Together’s personal finance CEO, said many mainstream lenders needed to keep pace with the demands of these types of borrowers. Some banks and building societies remained reliant on a computer-automated approach, and outdated and rigid criteria – when deciding mortgage applications, he said.
“The world has changed,” said Mr Ball. “People’s pay, working patterns and pensions have altered beyond all recognition from 30 or 40 years ago. Even where they live, who they chose to live with, or the type of property they want to buy is vastly different from a generation earlier.
“What was previously thought to be ‘normal’ simply doesn’t exist anymore.”
The wide-ranging study, which was conducted by market researchers YouGov, surveyed about 2,000 people about mortgage applications and the reasons why some of them had fallen out of the mortgage application process.