Getting a mortgage proves impossible for almost half of hopeful buyers

Almost half of those who had planned to buy a property since the introduction of the Government’s new affordability rules last year have failed to do so.

Research this month by Experian finds the Mortgage Market Review (MMR) has had considerable impact, with 45% of prospective home buyers unable to raise mortgages.

In a separate report out today, by Reeds Rains and Your Move, 13.1% of tenants believe they will never own their own home. Just 11.2% believe they will be home owners by this time next year.

In the Experian research, one quarter claim that the MMR has impacted their ability to buy a property, while a further 37% report that the changes have made them feel less in control of securing a mortgage.

The research also shows that many mortgage applicants have neglected the basics.

Almost half (46%) have never checked their credit report, meaning they have no indication of how a lender might view their ability to repay money.

Other reasons for failing affordability checks are also clear in the research, with 13% not knowing how much money they have left at the end of the month, and 18% not knowing what mortgage payments they could afford.

Of the 1,500 respondents who either bought or had planned to buy a property in the last year, 62% did not know lenders may require bigger deposits, 23% thought they could now get mortgages with smaller deposits, and 37% did not know that lenders would scrutinise affordability.

Of those applicants who failed to get mortgages, 11% did not know why they had been rejected as they simply had not asked.

However, despite the downbeat tone of the report, mortgage lending by high street banks did go up in April.

Approvals by the banks rose by 7% on the month before and by 2.8% year-on-year.

The total number of approvals was 70,310, while approvals for house purchase accounted for 40,850 of these – up 3% on April 2014.

The British Bankers’ Association said there had been a “significant pre-election jump” in approvals, although there was a possibility that the abolition of Stamp Duty in Scotland on April 1 may have been a factor.

According to agents Your Move and Reeds Rains, the number of first-time buyers was up 3% in April compared with March.

The Experian report, ‘The Mortgage Muddle’, is here


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