Millions of foreign nationals living and working in the UK are being shut out of homeownership because mortgage lending criteria have failed to keep pace with changing demographics, according to new research from specialist lender Gen H.
A survey of 295 mortgage brokers found that fewer than three in 10 (27%) consider foreign national mortgage cases straightforward to place, highlighting what Gen H describes as a significant gap in the mainstream lending market.
The research comes as immigration has added around 2.2 million people to the UK population in the three years since 2021, many of whom have established careers, stable incomes and aspirations to buy their first home.
Brokers identified low maximum loan-to-value limits as the biggest obstacle facing foreign national borrowers, cited by 51.3% of respondents. This was followed by a lack of lender choice (47.8%), restrictive visa requirements (43.9%), minimum time remaining on visas (31.1%) and minimum residency periods in the UK (30.7%).
FIRST-TIME BUYERS
According to Gen H, the average maximum LTV available to foreign nationals across the market is 85%, often only available to households earning around £75,000 or more.
For many first-time buyers with smaller deposits and average incomes, these restrictions create a substantial barrier to homeownership.
The lender argues that concerns around credit risk are increasingly difficult to justify.
Pete Dockar, Chief Commercial Officer at Gen H, says: “These findings are revealing because they illustrate how slow the industry is to change. We’ve had four years to prepare for the maturation of this cohort, and yet there has been little to no criteria improvement at the Big 6 lenders.
“The impression lingers that this group is inherently riskier than people who were born here, but that is simply not our experience.
“What is true is that too many big lenders have lending policies that are a decade out of date. From a credit risk perspective, we believe anyone with a track record of sustainable income and affordability should have the opportunity to access homeownership.
