More than 460,000 home loans turned down in past six months
More than 460,000 applicants have been turned down by mortgage firms in the past six months as Bank of England interest rate rises hit home, new research* by MoneyExpert.com shows.
Three Bank of England rate rises have been pushed through since August 2006 taking the base rate from 4.5 per cent to 5.25 per cent and adding around £750 to the annual cost of an average £100,000 variable rate mortgage.
And research from the independent financial comparison website shows the rate increases – with possibly another expected next month – are hitting home as lenders turn down more than 77,000 applicants a month.
Around 463,000 people had mortgage applications rejected in the six months to mid-March covered by the MoneyExpert.com research. Applicants aged between 18 and 34 were worst affected.
Sean Gardner, Chief Executive of MoneyExpert.com, said: "Affordability is the major issue in the mortgage market as recent reports of a drop in the number of first-time buyers demonstrates.
"The CML says the number of first-time buyers is at its lowest level for two years and given the relentless rise in house prices that is no surprise.
"The fact that around 77,000 mortgage applications are being rejected a month means it is likely that it is not only first-timers who are being hit. Lenders quite reasonably do not want to take risks when there are pressures on how much people can afford.
"Anyone taking their first step on to the property ladder needs to take advice and research the market before making an application. There are a range of products on offer to help including interest-only loans and 100 per cent mortgages.
"Homeowners should also consider secured loans if they are looking to raise money. Rising house prices mean they have equity in their home and if they do not need to move home a secured loan can be a viable alternative as rates are now very competitive."
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* YouGov interviewed 2,291 GB adults online between March 21st and 23rd 2007