- Up to 3.4 million borrowers have been turned down at least once for mortgages and loans in the past 18 months, GE Money Home Lending research shows
- One in eight of them had to apply four or more times before they were accepted for a mortgage or loan
- More than 412,000 could not get a mortgage or loan despite repeated attempts
- Broker market crucial to helping borrowers navigate a complicated and changing landscape
"Multiple failed applications can be time consuming and, of course, can be detrimental to a borrower. With criteria changing regularly and the risk of decline increasing all the time, it is even more important that borrowers looking to obtain a mortgage use reputable mortgage professionals with broad experience, knowledge and systems at their disposal which will increase the chances of the borrower getting the deal they need."
Gerry Bell, Head of Mortgage Marketing, GE Money Home Lending
The mortgage intermediary market has never been as important to consumers, reveals new research by GE Money Home Lending, one of the UK's leading special lenders. According to GE's research more than 458,000 mortgage and loan customers had to apply at least four times before successfully securing credit during the last 18 months.
With the recent trend of lenders tightening their criteria and focusing more efforts on direct offerings GE's research suggest that previously creditworthy people are now potentially being classed as a higher credit risk and therefore finding it more difficult to source the deal they need.
The research shows more than 3.4 million people claim to have been rejected for first mortgages, remortgages, unsecured loans and secured loans in the past 18 months covering 2007 and the first half of 2008 -- the majority of which will be as a result of the credit crunch.
Crucially, the research also reveals what people subsequently did, with 13% going on to make four or more applications before being accepted for the loan they needed. Around 30,000 people made more than eight applications. Around 30% gave up once they were rejected while 12% - around 412,000 -- were not accepted by any lender despite trying again.
GE Money Home Lending is warning lead to multiple failed applications. This could potentially increase the risk of borrowers being turned down as applications can be logged on credit records and could count against a borrower the next time they apply.
Consumers can take action themselves to increase their chances of a successful application by checking their credit file to ensure it is up to date, using credit agencies such as Experian. Other actions could include closing down unused credit cards and researching on the internet using price comparison websites before applying.
In addition for those seeking a mortgage, the lender believes the high number of rejections could potentially be cut if more consumers used brokers to help with applications. Borrowers can increase their chances of making a successful application by using a mortgage broker or packager. With the rapidly changing mortgage landscape they can advise on which companies are likely to accept them and steer consumers away from making applications which are doomed to failure.
Gerry Bell added:
"The focus in the mortgage market is now on availability more than anything else, with financially strong and experienced lenders the most likely to offer credit. In addition there are a number of dedicated specialist lenders with strong pedigree who may be able to help meet borrowers needs.
"The key to successfully navigating through the current storm is to ensure you do your homework, check your credit file looks as good as it can and potentially seek expert advice from a broker before making an application. Clearly consumers should try as far as possible to only apply to lenders where there is a good chance their application will be accepted and reputable, professional advisers are well placed to try to help to achieve this."
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Mark Maguire
GE
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+44 20 7302 6068
+44 7717 517071