The remortgage figures suggest that unless criteria improves, many borrowers will be stuck with the product transfer deals offered by their current lender or otherwise the SVR
Nearly one in five homeowners has been unable to remortgage since the start of the pandemic, according to a survey by Comparethemarket.
Moreover, the same proportion of first-time buyers (FTBs) has seen a property purchase fall through.
The remortgage figures suggest that unless criteria improves, many borrowers will be stuck with the product transfer deals offered by their current lender or otherwise the standard variable rate.
They could be left paying thousands of pounds extra each year compared to the most competitive remortgage deals.
Borrowers have been blocked from remortgaging because of the way the pandemic has impacted employment and financial stability.
Among those borrowers unable to remortgage, 41 per cent say their application was rejected because they lost their jobs and 32 per cent say it was because they were furloughed.
A quarter of homeowners thought their application was rejected because of a salary cut.
Comparethemarket says that among the 19 per cent of first-time buyers whose purchases fell through, 23 per cent say that their lender reduced their initial loan-to-income offer, 18 per cent say their lender increased their initial interest rate and 18 per cent say their lender asked for a larger deposit than originally required.
Magni Finance director Dean Esnard says: For existing customers, the majority of lenders will offer a product transfer, however this may be more expensive than rates elsewhere.
In the last few months, there has definitely been an increase in clients being unable to remortgage to a new lender where they have been financially impacted by Covid. Lenders are asking more questions on how customers have been impacted by Covid and want confirmation that their income is sustainable, Esnard says.
Keeping up-to-date with frequently changing criteria can be difficult for borrowers, so speaking to a broker has become more important than ever, Esnard says.
Comparethemarket director of mortgages Mark Gordon says: The pandemic does not yet appear to have had the decimating impact on house prices which many initially predicted; In fact, three-quarters of homeowners are confident they will sell their homes at the asking price. However, this does not mean that it is easy to get on, or move up, the property ladder.
He says, household finances have been put under severe strain this past year and many families have found themselves in a more precarious position when it comes to their jobs and income. This can have a direct impact on mortgage repayments – often our largest monthly outgoing – and the ability to buy a property.