Most First-time Buyers Failed to Get a Mortgage During the Pandemic

The recent study by Aldermore Bank reveals just 35% of first-time property buyers managed to secure a mortgage on the first attempt during the pandemic.

Before the pandemic, almost half (48%) of the first-time buyers (FTBs) succeeded in securing a mortgage on the first attempt.

The data reveals a significant impact of the pandemic as the settings continue to be challenging.

One of the key takeaways is the significant mortgage rejections levels experienced by FTBs.

Around 45% say their mortgage application was rejected once, while a further 20% say their mortgage was rejected more than once.

Main Reasons for Mortgage Rejections

Poor credit history ranked first place among the critical reasons for mortgage rejections (21%). Administrative errors come a close second, with 21% of FTBs claiming them as the reason for mortgage rejection. Lastly, insufficient deposit amounts (20%) closed the top three.

Perhaps employment difficulties have driven the most challenges FTBs had to experience recently. Almost half (49%) of first-time buyers faced employment disruptions during the pandemic, increasing concerns and challenges for securing a mortgage.

Around 35% of the respondent said they were put on a furlough scheme, but they are currently working now. However, 9% are still on the furlough scheme, while 5% either lost their income or have been made redundant since the beginning of the pandemic.

Financial concerns remain the main issue among FTBs as 62% are worried about their current finances.

Other Challenges And How Buyers React

Around 26% of the FTBs think of the credit history as a big issue, with 36% looking to improve their credit rankings and increase the chances of mortgage approval. Moreover, 19% are now concerned about worsening credit scores because of the pandemic.

First-time buyers claimed several reasons affecting the credit scores. An overdraft (29%), student loans (24%), and missed bill payments (21%) ranked the top three of the main factors impacting the credit rankings. More significant issues included payday loans (13%), having CCJ (7%), and having a bankruptcy in the past (6%).