Banks say 'no' to 80pc of requests for loans
BANKS and building societies are rejecting four out of five mortgage applications because they have tightened their lending criteria so much, new research reveals.
The results of a new survey contradict claims by banks that they are open for mortgage business.
A survey from the Select Finance Group, which provides back-office support services to financial advisers who arrange mortgage finance, found that only around 20pc of applicants were able to secure home loans.
The study found that one in five mortgage applications were not even logged on lenders' systems, and were automatically discarded for failing to meet basic lending criteria.
And 20pc of applications were rejected because of the applicant's job. Managing director of Select Finance Group Trevor Grant said that up to half of all lenders were "unofficially closed for new business".
He said a large number of mortgage applications were being rejected because of fears about the applicant's job security and constantly changing lender acceptance criteria.
The survey, which looked at all Irish mortgage lenders, found the main reason for applications being rejected was the applicant's inability to prove long-term repayment capacity -- 45pc of rejected applications failed to make the grade for this reason. Mr Grant said: "It has become increasingly difficult for brokers to find a lender who will offer a mortgage to applicants who 12 months ago would have been ideal candidates."
Lending criteria have tightened enormously, and brokers have learned that it is increasingly difficult to identify which lender is likely to look seriously at or approve each application, he said. "Preparing for a mortgage application is no longer simply a financial purchase, but more akin to applying for the job of a lifetime."
One leading bank last week denied it was restricting credit.
Director of consumer banking at Bank of Ireland, Brendan Nevin, said: "Bank of Ireland does not have a policy of rejecting specific occupations." He insisted each application was assesed on a case-by-case basis, with an assessment of repayment capacity the central factor.