Mortgage rejections rise despite looser lending rules

Summarised from 4 outlets · Updated 19 Oct, 14:57 · Archive

Mortgage lenders are rejecting a growing proportion of applications despite some loosening of borrowing criteria, as higher repayments and stricter affordability checks hit borrowers.

Mortgage lenders are rejecting a growing proportion of applications, despite loosening some borrowing rules, as higher repayments and stricter affordability checks leave buyers struggling to get approved.

The Bank of England's latest Credit Conditions Survey found that lenders reported a net balance of -10.5 for the proportion of mortgage applications approved in the third quarter of 2026, down from -8.0 in the previous three months. A negative figure means more lenders reported approving a smaller share of applications than reported approving a larger share. The latest reading marks a sharp reversal from the start of the year, when the figure stood at +22.9, the second-highest reading in the survey's 19-year history.

Borrowers with deposits below 25% have been particularly affected. Lenders reported a net balance of -19.9 for mortgage availability in this group, compared with -2.2 in the previous quarter. Yet lenders also reported greater willingness to lend relative to borrowers' incomes, with a net balance of +9.2 for maximum loan-to-income limits.

Mortgage experts say looser lending criteria do not guarantee approval. Lenders still assess whether borrowers can afford repayments, examine their finances and assess the property being purchased. Ranald Mitchell, director at Charwin Mortgages, said that mortgage declines are rarely about one major issue but rather where 'several smaller risks stack up and the lender's model says no'. He identified affordability as the biggest pressure point, followed by credit history and then factors such as income structure, deposit, property type and spending patterns.

How it is being reported

• Mortgage declined after an agreement in principle? Experts explain whyMortgage rejections are rising despite looser lending rules. Experts explain six reasons applications fail and what to do if your mortgage is declined.This Is Wiltshire · 19 Oct, 13:39
• Mortgage declined after an agreement in principle? Experts explain whyMortgage rejections are rising despite looser lending rules. Experts explain six reasons applications fail and what to do if your mortgage is declined.Swindon Advertiser · 19 Oct, 13:39
• Mortgage declined after an agreement in principle? Experts explain whyMortgage rejections are rising despite looser lending rules. Experts explain six reasons applications fail and what to do if your mortgage is declined.Wiltshire Times · 19 Oct, 13:39
• Mortgage declined after an agreement in principle? Experts explain whyMortgage rejections are rising despite looser lending rules. Experts explain six reasons applications fail and what to do if your mortgage is declined.Gazette & Herald · 19 Oct, 13:39

In this story: Bank of England · Charwin Mortgages · Ranald Mitchell

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