Mortgage rejections increase and experts explain what to do to avoid it

Was your mortgage declined? Lenders have reported that the proportion of mortgage applications being approved fell for a second consecutive quarter, recording a Bank of England net balance of -10.5 in the third quarter of 2026 after -8.0 in the previous three months.

A net balance below zero means more lenders reported approving a smaller share of applications than reported approving a larger one. That followed a reading of +22.9 at the start of the year, when lenders were approving a growing share, the second-highest figure in the 19-year history of the Bank of England's Credit Conditions Survey.

In other words, the share of applications being approved has swung from a near-record high to a decline within the same year and the change has been particularly sharp for borrowers with deposits of less than 25%. Lenders reported that mortgages for buyers with deposits under 25% became much harder to get - a net balance of −19.9, from −2.2 the previous quarter.

At the same time they said the borrowers they did approve were lower-risk than before (+6.5), which suggests the people closest to lenders’ affordability limits are the ones being turned away. The Newspage research , sponsored by Charwin Mortgages , found that borrowers are being rejected despite lenders apparently making some of their rules more generous.

The Bank of England’s latest Credit Conditions Survey shows lenders said they were willing to lend more relative to a borrower’s income - a net balance of +9.2 for maximum loan-to-income limits. But the overall availability of mortgages fell and lenders approved a smaller proportion of applications.

Mortgage brokers said the apparent contradiction reflected the gap between lenders loosening headline criteria and borrowers passing a full affordability assessment at current mortgage rates. Higher monthly payments, unsecured debts, irregular income, bank-statement activity, property problems and differences between lenders’ internal scoring models can still result in an application being rejected.

Ranald Mitchell, director of Norwich-based Charwin Mortgages , said: "Mortgage declines are rarely about one big red flag, they are usually where several smaller risks stack up and the lender’s model says no. Right now affordability is the biggest pressure point, followed by credit history and then the detail of the case itself, income structure, deposit, property type or spending patterns.

"Declines are also frequent simply because the borrower has gone to the wrong lender. The same case can be declined by one bank and accepted by another because criteria and scorecards vary so much. A good credit score and decent salary are no guarantee.

“The biggest mistake after a decline is firing off another application blindly. Find out why it failed, fix the weak point and choose the next lender properly.