Up to 80 per cent of mortgage applications are now being rejected by lenders, an organisation representing independent brokers has claimed.
The Professional Insurance Brokers Assocation (PIBA) said some 55 per cent of its members in a survey said lenders were rejecting between 60 per cent and 80 per cent of mortgage applications. First-time buyers and the self-employed were being hardest hit by the credit squeeze, it said.
It has some 900 members and 103 took part in the survey.
The body also found that over 77 per cent of brokers said the situation was “worse or much worse” than last year while 19 per cent felt there was no change.
The main reasons for declining mortgage approvals are that applicants have no savings (35 per cent), that applicants did not qualify for the amount required (32 per cent), job security (29 per cent) and bad credit history (29 per cent).
PIBA director Rachel Doyle said the findings were “stark, although not surprising given that we know there is a lending freeze for virtually everyone except those whom lenders consider to be safe”.
“When you factor in the likelihood that many potential first-time buyers are probably not now applying for mortgages because they know banks have tightened up considerably, the situation is extreme.”
Ms Doyle said the lack of credit was “a major issue”and it was hampering a recovery in the property market.
“Property prices have dropped by about 35 per cent in general since the peak in December 2006. And the average first-time buyer is now paying half of what they would have paid on monthly mortgage repayments in December 2006.”
She said anyone trying to get a mortgage should ensure they were well-informed on up-to-date practices before approaching lending institutions.