Shawbrook’s Home A-Loan report found that 34% of individuals who had their mortgage applications rejected were not referred to a specialist lender, despite many meeting the necessary criteria

A considerable proportion of mortgage applicants in the UK are being declined without being offered alternative specialist lending solutions, a recent study by Shawbrook has revealed.

The specialist lender’s Home A-Loan report found that 34% of individuals who had their mortgage applications rejected were not referred to a specialist lender, despite many meeting the necessary criteria.

The main reasons for mortgage rejections included fluctuating income (26%), low credit scores (25%), missed payments (21%), and affordability concerns (21%). These are circumstances that specialist lenders are equipped to address, often affecting groups such as self-employed individuals, contractors, and those with previous credit issues.

The findings highlight a gap in support for borrowers with non-traditional income or imperfect credit histories, raising concerns about access to homeownership in the current market. For mortgage brokers, this presents an opportunity to guide declined applicants towards specialist lenders and offer tailored advice, helping more clients secure mortgages and reinforcing the broker’s value in the process.

The report also found that only 25% of consumers understood what a specialist lender is and how to approach one, while 46% had heard the term but did not know its meaning. This lack of awareness means many potential homeowners are not exploring all available options.

For those who did seek assistance from a mortgage broker, 97% were able to find a suitable lender, and the same percentage valued their broker’s expertise in the specialist market. Additionally, 95% said that brokers made the application process more straightforward. However, only 22% of applicants had actually used a broker, indicating a need for greater awareness of the support available.

There is a concerning lack of support for those with unconventional profiles, whether this is due to their employment type or credit history – and this can often stop people’s homeownership goals in their tracks, without any explanation or advice for next steps, said Steve Griffiths, commercial director for retail mortgages at Shawbrook.

He said: Specialist lending is a solution to this dead-end, but it continues to be something that only a minority of borrowers understand, or are even aware of.