A third (30%) of adults have had a credit blip on their record in the past, causing real challenges for homeowners trying to secure a high street mortgage in the short-term, according to the latest research from Together.
While over half (51%) were aware of their credit history status before applying for a mortgage, 14% were unsure of how likely they would be approved.
This is highest among younger borrowers, with 45% of 18 to 34-year-olds, 35% of 35 to 54-year-olds and 16% of 55’s and older impacted when getting a high street mortgage.
This highlights a glaring awareness gap as nowhere near enough potential mortgage borrowers are aware of their credit score and how it can significantly impact the success of high street applications.
This is also becoming a much wider issue – impacting more income brackets.
Together’s own internal data shows an increase of two thirds (66%) in middle-class borrowers with adverse credit taking out first charge mortgages since 2019 (pre-pandemic) when compared to 2022.
So far this year, 14% of the first charge mortgages Together has funded have had credit issues, with expectations this will only continue to rise amid ongoing cost of living challenges.
Credit issues are also having a knock-on impact to future property plans. A quarter (24%) are re-thinking their future mortgage and property plans altogether, compounded by recent increases in interest rates and inflation.
What’s more, 64% of those who are not confident in being able to keep up with their mortgage repayments this year had a previous credit blip – compared to 32% without any blips – in a further indication of the increased awareness needed around mortgage application support.
Alan Davison, personal finance distribution director at Together, said: “Would-be homeowners across the UK are being locked out of the mainstream mortgage market, simply because they have minor adverse credit of a few hundred pounds.
“Banks and other high street lenders often stick rigidly to strict criteria and automated processes when deciding whether to approve a mortgage application, and credit blips – even if they’re historical and have been caused by a debt that has been paid off – can easily lead to rejection.”
He added: “With more borrowers likely to accrue blips in the current climate, it’s important to remember there are still specialist lenders out there who will still consider blips or CCJs on applications, so long as a clear repayment plan has been set up.
“At Together, we recognise the need for lenders who are agile enough to meet the needs of an increasingly specialised market.”
