According to a survey by LendInvest, which was carried out by Opinium with around 1,000 adults who were non-salaried, key workers or had missed a payment, this compares to 14 per cent of the general population.
Nearly a third, 32 per cent, said a barrier to applying for a mortgage was the fear of being rejected and around 29 per cent said they had felt discriminated against by a high street mortgage lender or bank due to their employment status or income streams.
This rises to 39 per cent of those with poor credit and 59 per cent of those who had been rejected for a mortgage.
Over a third said that mortgage products available discourage them from applying.
The most important factors when looking at a lender was offering low interest rates at 59 per cent, followed by good customer service and support at 48 per cent and variety of products at 42 per cent.
Around 41 per cent said that being turned down for a mortgage had left them feeling frustrated, 29 per cent said they were stressed and 28 per cent said they were embarrassed.
Approximately 20 per cent said that they felt hopelessness after being rejected for a mortgage.
However, 19 per cent said they were more determined and 14 per cent said they felt more positive.
Around 77 per cent said they had a negative feeling about the outcome and that rose to 80 per cent for those with poor credit.
Nearly half said they had been negatively impacted by the mortgage application process, with the biggest impact being on finances, followed by mental health and confidence.
Nearly a quarter think they will never apply for mortgage
Over half said that they had gone to “great lengths” to up their chance of getting a mortgage.
This includes a fifth saying that they stayed in jobs they didn’t like, 14 per cent pushed back retirement plans, 13 per cent opted for a higher salary over their dream jobs and 11 per cent delayed or cancelled plans to become self-employed or freelance.
Nearly three quarters of those that had been turned down at least once had taken action, with over a quarter pushing back retirement plans and 20 per cent delaying plans to become self-employed or freelance.
Around 22 per cent believed that they will never be able to apply for a mortgage and 43 per cent said they thought they were less able to become a homeowner due to the cost of living crisis.
More than half of those with poor credit said the cost of living crisis had impacted on their ability to apply.
However, around 41 per cent of those who don’t own said that a fall in house prices would encourage them to buyer a property.
New avenues needed for a new breed of borrower
LendInvest called for lenders to offer more flexible underwriting criteria, develop specialist mortgage products, use alternative credit assessments, enhance documentation guidelines, offer in-house expert support, give customers educational resources and guidance and offer a strong customer service.
Esther Morley, managing director, residential mortgages at LendInvest, said: “The research confirms our long-held belief that the traditional high street mortgage model is not fit for purpose for a large proportion of the UK population and is failing to keep pace with the increasingly complex needs of prospective homeowners.
“An increasing number of people across the UK have different income streams that do not conform with outdated legacy platforms and processes, leading all too often to dispiriting ‘Computer Says No’-style responses. Many are left navigating a needlessly complicated, intrusive and stressful process, resulting in hardworking people being denied the dream of owning their own home and suffering unnecessary mental anguish.”
Rod Lockhart, chief executive officer of LendInvest, added: “These results shed more light on the difficulties facing those with more complex cases applying for a mortgage and the general sentiment regarding the mortgage process during what is a difficult time for potential homeowners. It’s especially upsetting to see the emotional toll on a worryingly large number of people.
“Our residential mortgage products are designed to address the evolving needs of aspiring UK homeowners. With proprietary technology that streamlines applications and makes even the most complex cases simpler and faster, our aim is to improve the overall mortgage experience.”
