BSA: Consumers fear being turned down for a mortgage
The availability of mortgage finance has improved say consumers, but fear of being turned down still puts people off buying a property, the Building Societies Association's (BSA) quarterly Property Tracker report has revealed.
Over the last year, credit conditions have begun to ease for homebuyers, the UK-wide survey of 2,000 people has suggested.
Although 'access to mortgage finance' remains one of the largest barriers to property purchase, less than half (46 per cent) of consumers said this was a hurdle to overcome in September 2012, 13 per cent lower than the 59 per cent who cited this as a barrier in September 2011.
The Property Tracker report also found that only a very small proportion of people who said that the prospect of getting a mortgage put them off from buying had actually spoken to a lender or undertaken their own research.
Overall 21 per cent said the main reason they were put off was that they had concerns that their income was not high enough to borrow as much as they would like, 16 per cent said they were put off because news stories reported a lack of mortgage lending by banks and building societies, 16 per cent had concerns that their deposit was not large enough and 14 per cent said it was because of a fear of being turned down for a mortgage.
Just 3 per cent had applied for a mortgage and been turned down, and 4 per cent had spoken to a broker or lender or done other research and concluded they might not get a mortgage.
For first-time buyers, 29 per cent said it was belief that their deposit was not large enough which put them off purchasing property, while nearly a quarter (23 per cent) said they had a fear of being turned down for a mortgage. A further 13 per cent said they were put off because of stories reported in the news about a lack of mortgage funding.
Paul Broadhead, head of mortgage policy at the BSA, commented: "Results from our Property Tracker report indicate that the barriers to purchasing property may be largely down to perception, rather than actual experience.
“Although mortgage availability has undoubtedly reduced since the start of the financial crisis, some lenders such as building societies and other mutuals have actually increased their lending to all types of borrowers, including first-time buyers, over the last year or so."
"In the first seven months of 2012, mutuals lending has increased by 39 per cent compared to the same period last year and over the same periods the number of loans made by mutuals at loan-to-value ratios at or above 85 per cent has increased by 27 per cent.
“Homebuyers may be surprised to find that a mortgage is within their reach and should talk to a lender or broker before counting themselves out of the housing market."