The research from independent financial comparison website, MoneyExpert.com, revealed the number of mortgage application rejections has risen by some 60 per cent since March.
In the six months to March around 463,000 people had a mortgage application rejected. This figure has since risen to 738,000 in the six months to October as Bank of England interest rate rises hit home and borrowers come up against tougher lending criteria.
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Five Bank of England rate rises have been pushed through since August 2006, with two coming since May 2007, pushing the base rate from 4.5 per cent to 5.75 per cent and adding around £1,320 to the annual cost of a typical £150,000 variable rate mortgage.
The research showed that of the 738,000 people who had mortgage applications rejected in the six months to the beginning of October, applicants aged between 25 and 34 were worst affected. Around 4 per cent of people in this age bracket have had an application turned down around 382,000 young mortgage applicants.
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Sean Gardner, Chief Executive of MoneyExpert.com, said: Life is tough at the moment if youre applying for a mortgage. The financial environment is far more stringent than in the summer of last year and people need to be prepared for rejection.
This time last year house prices were 10 per cent cheaper and the year before that they were 20 per cent cheaper so its no surprise that the CML has suggested the number of first-time buyers on the market is dwindling.
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But with so many applications being rejected its unlikely that only first-time buyers are being affected. Anyone looking to remortgage should apply with caution and take professional advice if theyre unsure too many failed applications could affect your credit rating.
Lenders quite reasonably do not want to take risks when there are pressures on how much people can afford, so its up to the applicant to convince their bank that they can cope with the repayments.
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