According to a recent report released by Alderidge bank, since the beginning of the Covid pandemic, 45% of first time buyers were rejected when applying for a mortgage.
The First Time Buyer index, which was developed and first published pre covid, shows that only 35% of the 2,015 survey participants, were successful in securing a mortgage deal on their first attempt. This figure has significantly dropped from 48%, seen before the initial covid lockdown.
A whopping 45% of first time buyers reported that they were rejected on their first application with 20% of those also being rejected multiple times when applying elsewhere.
The most common reason for rejected first time buyer mortgage applications is poor credit history with 21% of participants stating this as the main cause for not being successful in securing a mortgage.
Administrative errors accounted for another 21%, whilst 20% of those surveyed, claimed to not be able to afford the large deposit needed for the purchase.
With 49% of prospective first time buyers having some sort of disruption to their jobs, lenders were understandably more cautious when it came to accepting applications, making it much harder to secure a FTB mortgage.
The report showed that 35% of participants were put onto furlough but had now returned to work. Just under 10% had remained on furlough, with a further 5% being made redundant or having significant reduction in income since the onset of the pandemic.
The head of mortgage distribution at Aldermore, John Cooper commented: “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.”