The ‘Thanks for Nothing’ initiative aims to provide a voice for the many people who are refused a mortgage from their bank and then become trapped in expensive rent cycles and cannot make the first step on the property ladder.
It’s the brainchild of Haysto, a specialist mortgage platform, which is concerned banks are not providing the vital support so many would-be first-time buyers need.
Indeed, it said over 50% of its customers have been rejected for a mortgage elsewhere, either by their high street bank or mortgage brokers.
But it said those in complex situations – such as self-employed or those with bad credit history – could still qualify for a mortgage, even if they had been previously rejected.
Paul Coss, co-founder of Haysto, explained: “Self-employment and poor credit histories are on the rise in the UK, so a growing number of people applying for mortgages simply don’t fit the traditional financial mould.
“Many are being rejected by traditional lenders and online mortgage brokers that can’t see past their situation, while others will be put off from applying at all.”
Off-putting
According to a 2019 survey by specialist mortgage lender Bluestone, 45% of people who were refused a mortgage by their bank said being rejected by a high street bank made them feel less inclined to reapply for a mortgage.
This meant they were unlikely to seek the advice of a specialist mortgage broker who could help them.
And with 90% of specialist mortgage lenders only lending through specialist mortgage brokers, the situation would become trickier for would-be homeowners.
Over a third of mortgage brokers surveyed (37%) said that in the majority of cases where they’d referred a client to a specialist lender, it was because they had been previously rejected by the high street – up from 29% in the previous year.
Buyer profiles were changing, and according to the survey, most were refused as a direct result of a low credit score (68%), adverse credit (28%), irregular income streams (22%) or CCJs (18%). A substantial minority (11%) said it was due to multiple income streams.
The market’s also seen a rise in later-life lending, with an increase in borrowers over the age of 55. As in other cases, it is specialist lenders with bespoke underwriting processes who are best placed to deal with the more complex requirements our changing society increasingly produces.
Yet awareness of specialist lenders remains low.
Only 39% of brokers interviewed said that their customers were aware of the difference between mainstream banks and specialist lenders, suggesting that many are applying to the high street banks inappropriately, and facing unnecessary rejection.
Covid: ‘millions in financial difficulty’
Steve Seal, CEO of Bluestone Mortgages said: “Covid-19 has left thousands – if not millions – of people in financial difficulty, and as a result many will emerge from the Covid-19 pandemic with more complex borrowing needs.
“We have already seen evidence of this, with our application volumes in January and February 2021 increasing by 90% compared to the same period in 2020.
“We anticipate this trend to continue over the coming years as borrowers navigate the fallout of the pandemic and increasingly approach lenders who can support them with affordable financing.
‘Focus on needs not deposit’
Craig McKinlay, new business director at specialist mortgage lender Kensington said: “We need to help as many people as possible achieve their home buying dreams, especially those left out in the cold by the big banks.
“I’d like to see a far bigger focus on customers’ needs rather than what size of deposit they have.
“The pandemic has affected a huge amount of people, so it’s really important that we help them find a way to get on the property ladder by showing some understanding and flexibility.”
