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19 September 2012

Prospective mortgage borrowers fear rejection

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by Gill Montia

Prospective mortgage borrowers fear rejection

While consumers believe availability of mortgage finance has improved in recent months, the fear of being turned down for a home loan is putting people off buying a property, the Building Societies Association (BSA) reports.

In a new study, the BSA claims that people are aware that credit conditions have begun to ease for homebuyers.

While “access to mortgage finance” remains a barrier to property purchase, less than half of those questioned said this was a major hurdle to overcome.

However, 21% of prospective borrowers thought their income was too low to borrow as much as they might want and 14% were afraid of being turned down for a mortgage.

In addition, 16% were put off by news reports of a lack of mortgage finance and the same proportion had concerns that their deposit would be too small.

For prospective first-time buyers, 29% thought their deposit would be inadequate, while 23% were fearful of being turned down for a home loan.

A further 13% said they were put off because of stories reported in the news about a lack of mortgage finance.

In reality, just 3% of respondents had applied for a mortgage and been turned down, while 4% had spoken to a broker or lender or done other research and concluded they might not get a mortgage.

The BSA’s head of mortgage policy, Paul Broadhead, comments: “Results from our Property Tracker report indicate that the barriers to purchasing property may be largely down to perception, rather than actual experience.”

He adds: “Although mortgage availability has undoubtedly reduced since the start of the financial crisis, some lenders such as building societies and other mutuals have actually increased their lending to all types of borrowers, including first-time buyers, over the last year or so.”

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