Thousands of UK mortgage applicants continue to face barriers to homeownership due to what experts describe as a “broken” and “outdated” mortgage system.
New research from specialist lender Together highlights the plight of so-called ‘non-standard’ borrowers – individuals who don’t meet the rigid lending criteria of mainstream banks and building societies.
The report found that while 19% of non-standard mortgage applicants were rejected between 2017 and 2022, rejection rates remain persistently high. As of 2024, Together’s Residential Property Market Report found 7% of applicants are still struggling to secure a mortgage, with factors like age, employment type, and credit history contributing to their exclusion.
Nearly two in five (39%) of rejected borrowers were turned down for attempting to purchase a property through Shared Ownership, while 29% were denied due to thin or impaired credit histories.
Another 27% cited reasons like being over 55 or divorced, and 22% reported rejection due to self-employment.
The emotional toll of these rejections is significant. A quarter of non-standard applicants reported feeling stressed or upset during the mortgage process, with 14% saying they felt judged.
Among those using schemes like Shared Ownership, 19% said they experienced sleepless nights, and 5% gave up on homeownership altogether, opting to return to renting.
Together argues that a more flexible approach to lending could help these underserved groups. The specialist lending market, already valued at £32billion, is expected to grow by 70%, reaching £54billion by 2029.
Ryan Etchells, chief commercial officer at Together, commented: “Life and work as we’ve known it is evolving and there are now more of us who don’t comply with the ‘one size fits all’ lending methods of what worked for previous generations. And, while it’s positive that the proportion of those rejected for a mortgage has fallen over the last five years, challenges remain, and the emotional toll is still of great concern.
“In order to support more people with their property ambitions, we need to work in step with the wider industry to make the application process as seamless as possible, and continue to challenge the outdated systems, processes and stereotypes which are responsible for many of the access barriers that exist.”
Mr Etchells also emphasised the need for Government intervention to address affordability issues and promote homeownership.
He said: “Chancellor Rachel Reeves’ Budget in October saw the important task of cementing plans for the Affordable Homes Schemes and house-building efforts from next year.
“But what’s missing is Government intervention at industry level to reassess exactly how to bridge the issue of affordability and home ownership in the UK, whilst specialist lenders look to continue to support those that are locked out of home ownership by a broken mainstream mortgage market.”
