High net worth individuals are struggling to get credit with about a ninth being turned down for a mortgage in the past decade due to rigid criteria applied by banks, according to a survey.
Research conducted recently among more than 500 wealthy individuals with assets exceeding £1m, found that a ninth had been turned down for a secured loan, despite their wealth, while five per cent had been denied an overdraft.
Bank underwriting approaches heavily reliant on fixed criteria were blamed for this by those polled.
About 79 per cent thought high street lenders applied tick box methods to assess mortgage applications.
Complicated financial profiles were one of the main challenges for high net worth individuals when securing credit because their wealth was often tied up in property or illiquid assets.
When surveyed, 44 per cent of respondents said they have found it “inherently difficult” to access credit because their assets are tied up elsewhere while 73 per cent said that specialist mortgage brokers “play an important role” in identifying the lenders that cater for their needs.
It may come as a surprise that of all the demographics, the UK’s wealthiest people often find themselves at an immediate disadvantage when it comes to applying for credit from banks; be it mortgages or credit cards.
“In reality, the rigid ‘tick box’ methods applied by many conventional lenders are not compatible with HNWs’ unique and often complicated financial profiles.
“To overcome these challenges HNWs need to seek out brokers or lenders who can commit the necessary time and expertise to understand their situation and, in turn, deliver mortgages that meet their specific needs.”
