Amount of people refused a mortgage set to rise
New restrictions have been introduced by lenders meaning that high-risk lenders will find it increasingly difficult to secure a mortgage. Because of the changes by lenders to their lending criteria it is expected that the number of rejections for home loans are going to soar.
An independent broker has released new research showing that a quarter of all sub-prime and specialist mortgage applications that had would have been accepted last year would now be rejected.
Low income households as well as borrowers with poor credit histories are going to find it increasingly difficult to even get a bad credit loan because of the changes that have been introduced by lenders.
David Titmuss, the managing director of the company that released the figures has claimed that the potential impact upon the economy as a result of more and more people being rejected for mortgages could be far worse that many experts have admitted.
It is expected that more and more people will have to go into debt management and Individual Voluntary Arrangements (IVA) because they will no longer be able to secure and affordable mortgage. The number of home repossessions is also expected to go up which could lead to an overall fall in house prices as there simply will not be enough money to buy them.
Another financial website has found that roughly 5% of first time buyers are at a very high risk of being caught out when there is a downturn in the housing market.