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Rate rises 'leading to mortgage rejections'

New reports indicate that the number of mortgage applications being denied by lenders is on the increase, rising in line with increases in the base rate.

According to figures from Moneyexpert.com, more than 460,000 mortgages have been rejected over the past six months, with some 77,000 applications being turned down each month.

These trends are indicative of rising interest rates impacting upon the affordability of new buyers.

"Affordability is the major issue in the mortgage market as recent reports of a drop in the number of first-time buyers demonstrates," remarked Sean Gardner, chief executive of Moneyexpert.com.

"Lenders quite reasonably do not want to take risks when there are pressures on how much people can afford."

The Council of Mortgage Lenders recently reported that fixed-rate mortgages were selected by 87 per cent of first-time buyers in February, suggesting that many prospective buyers share concerns over potential rate rises in the future.

Three separate interest rate increases have taken place since August 2006, leaving the base rate at 5.25 per cent at present.

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16/04/2007 13:38:41

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