People who are wrongly refused a mortgage and trapped in expensive rent cycles aren’t being offered vital support from their banks, says specialist mortgage platform Haysto.
Haysto is campaigning for banks to offer better support to the customers they reject as part of their new ‘Thanks For Nothing’ initiative.
Over 50 per cent of Haysto’s customers have been rejected for a mortgage elsewhere, either by their high street bank or mortgage brokers. Those in complex situations (such as self-employed or bad credit history) could still qualify for a mortgage, even if they’ve been previously rejected.
Paul Coss, co-founder of Haysto, explains: “Self-employment and poor credit histories are on the rise in the UK, so a growing number of people applying for mortgages simply don’t fit the traditional financial mould.
“Many are being rejected by traditional lenders and online mortgage brokers that can’t see past their situation, while others will be put off from applying at all.
According to a 2019 survey by specialist mortgage lender Bluestone, 45 per cent of people who were refused a mortgage by their bank said being rejected by a high street bank made them feel less inclined to reapply for a mortgage, meaning they weren’t likely to seek the advice of a specialist mortgage broker who could help them. And with 90 per cent of specialist mortgage lenders only lending through specialist mortgage brokers, this makes the situation more tricky for would-be homeowners.
Over a third of mortgage brokers surveyed (37 per cent) said that in the majority of cases where they’d referred a client to a specialist lender, it’s because they’ve been previously rejected by the high street – up from 29 per cent in the previous year.
Buyer profiles are changing, and according to the survey, most were refused as a direct result of a low credit score (68 per cent), adverse credit (28 per cent), irregular income streams (22 per cent) or CCJs (18 per cent). A substantial minority (11 per cent) said it was due to multiple income streams.
The market’s also seen a rise in later-life lending, with an increase in borrowers over the age of 55. As in other cases, it’s specialist lenders with bespoke underwriting processes who are best placed to deal with the more complex requirements our changing society increasingly produces. Yet awareness of specialist lenders remains low.
Only 39 per cent of brokers interviewed said that their customers were aware of the difference between mainstream banks and specialist lenders, suggesting that many are applying to the high street banks inappropriately, and facing unnecessary rejection.
Steve Seal, CEO of Bluestone Mortgages said: “Covid-19 has left thousands – if not millions – of people in financial difficulty, and as a result many will emerge from the Covid-19 pandemic with more complex borrowing needs. We have already seen evidence of this, with our application volumes in January and February 2021 increasing by 90 per cent compared to the same period in 2020.
“We anticipate this trend to continue over the coming years as borrowers navigate the fallout of the pandemic and increasingly approach lenders who can support them with affordable financing.
Craig McKinlay, new business director at specialist mortgage lender Kensington, said: “We need to help as many people as possible achieve their home buying dreams, especially those left out in the cold by the big banks. I’d like to see a far bigger focus on customers’ needs rather than what size of deposit they have. The pandemic has affected a huge amount of people, so it’s really important that we help them find a way to get on the property ladder by showing some understanding and flexibility.”
Peter Beaumont, CEO of The Mortgage Lender said “Most of our customers have complicated financial circumstances. We believe it’s in their best interests to get professional advice from a specialist mortgage broker to access the right product for their situation before making such a big financial commitment. If you’ve got bad credit, are self-employed or have complex situation Haysto’s one of the best platforms for getting access to these specialist brokers.”
Haysto’s “Thanks for Nothing” campaign aims to raise more awareness of the specialist lending market among would-be homeowners. Their unique platform matches customers to a specialist mortgage broker based on their unique situation. The platform gives customers real-time visibility on specialist mortgage products, and 24/7 access to see how their mortgage application is progressing.