Number of home loan applications rejected on the increase
LONDON: Several hundreds of thousands of people, who had made mortgage applications in the U.K. had been denied mortgages in the last six months mainly on account of increased interest rates, according to research by an independent financial website.
MoneyExpert.com, which compiled the figures based on research, said the number of rejected applications increased by 60 per cent during the last six months. A total of 738,000 home loan applications were rejected by lenders during the period, compared with some 463,000 such applications during the previous six-month period, the website said.
MoneyExpert.com said several reasons including higher interest rates and higher lending criteria adopted by funding organizations have contributed to this situation. The five rate revisions since August 2006, it said, have led to increased repayments. Young borrowers — those in the age group of 25-34 — were specially affected by this situation and around 5 per cent of people in this age bracket faced rejection of their applications.
MoneyExpert.com’s chief executive Sean Gardner said the environment at present is very stringent and applicants should be prepared for rejection. He, however, said the rise to some extent appeared to be seasonal as summer is the peak time for mortgage applications.
Several economists have said lending conditions are expected to become tighter now as a result of the credit crunch prevailing globally and the sub-prime mortgage crisis in the U.S. Housing loan companies will adopt stricter norms now for lending, they added.
The Council of Mortgage Lenders admitted more number of prospective home loan seekers is likely to be affected by the credit squeeze but said the research figures should be treated with caution.
