Rental sector solution for those unable to secure a mortgage

Nearly three quarters of mortgage intermediaries were unable to source a mortgage for at least one of their clients during the third quarter, helping to fuel tenant demand for the

Related topics:  Mortgages
Millie Dyson
21st October 2011
Mortgages
However, most intermediaries remained optimistic that they could help most of their customers.
 
Despite an improvement in mortgage product availability in recent months, research by the Intermediary Mortgage Lenders Association found that 73% of intermediaries were unable to secure a mortgage for at least one of their clients during the period.

Of cases where a mortgage was unable to be sourced, 56% were in respect of borrowers with some level of adverse credit, 51% were first-time buyers and 51% were clients remortgaging.

Fairing slightly better, 31% were next-time buyers and only 15% were standard status borrowers.
 
Credit status and credit quality is clearly important but equally significant is the finding that 47% of the first-time buyers unable to find mortgage finance through their broker opted to rent instead. In addition, 13% of the next-time buyers also opted to move into rented accommodation.
 
Despite difficulties in securing mortgage finance for certain types of clients, most intermediaries still remain optimistic in the markets with 49% reporting that mortgage market conditions improved during the third quarter, compared to 14% who thought that conditions in the sector worsened.

The remaining 37% said that conditions remained unchanged. In addition, 34% of intermediaries believe standard mortgage business levels will improve during the fourth quarter of the year.
 
Peter Williams, IMLA Executive Director, said of the research:

“Mortgage market conditions have been showing some improvement, but certain types of borrowers are still struggling to get on to the property ladder, particularly at the periphery of the mortgage market.

"For those seeking a mortgage, intermediaries remain the best conduit to find the right deal as they have the skills and knowledge to match lenders with borrowers, but our research highlights the continued tough conditions in the market when even they are struggling to secure finance for some customers.
 
“This demonstrates that first-time buyers are still amongst those struggling to find mortgage finance. Deposit requirements have improved over recent months but this is still a sticking point for those trying to get on the ladder.

"For those without a substantial deposit or support from a family member the rented sector is the next alternative.”
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