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Nearly a fifth of people turned down for a loan

Eighteen per cent of Australians have been turned down for a home loan by a financial institution and nearly one in 10 have been rejected by a big four bank, according to new research.

According to a survey of around 1,100 people undertaken in May, 18 per cent said they had been turned down for a loan by a financial institution, while nearly a tenth had been rejected by one of the big four banks. 

The research, which was undertaken to highlight the growing proportion of Australians who are being “locked out” of the financial system, found that more than a quarter (26 per cent) of the Aussies that were turned down for loan were refused because they were either self-employed or worked part-time. 

Further, more than half (54 per cent) of those rejected for a loan at a bank were “unaware” that there was another option available. 

Speaking to Mortgage Business, Pepper Money's managing director, Australian mortgages and personal loans, Mario Rehayem said that when the figure of loan rejection was extrapolated out to reflect the Australian population, that would equate to 3.6 million people that are “underserviced”. 


Mr Rehayem said that it was “quite an alarming result”, adding that there is a “void” being created by larger financial institutions, as they are “very fixated on one style of customer or personas”. 

He explained: “People are not qualifying for loans for an array of different reasons; it's not just because they are self-employed, it could be the type of income that they have. The emerging gig economy has really started to come to the fore… And that finding [of people being unable to access finance] will continue to grow because the old-style policies are not really adapted to the new style of Gen Y and the gig economy. 

“We are a nation of entrepreneurs and we do embrace upcoming opportunities and when we do that… it might not mean that we've been self-employed for a minimum of two years [the common requirement from major institutions lending to self-employed persons]. 

He continued: “These are the factors that the industry needs to have a really good think about; yes, everyone has to take a calculated risk on the top of borrowings and money that we lend out, but at the same time we cannot be ignorant or oblivious to a change and a shift in the way people work.” 

Mr Rehayem highlighted that Pepper Money specialises in providing finance to this "underserviced market" adding that more than 90 per cent of its home loan applications are conditionally approved because they "look at the whole picture of an individual’s circumstance when making a loan assessment to understand their real life".


The research also showed that 42 per cent of Australians do not feel their financial institution understands their needs and financial goals, while 63 per cent said they withhold information from their main financial institution. 

The managing director of Australian mortgages and personal loans concluded: “There is a growing disconnect between Australians and financial institutions, which is causing many Aussies to fall through the cracks.

Brokers play a vital role in helping to access these people, understanding their whole situation and helping them to find a solution that meets their needs.”

[Related: Specialist lender JV project collapses]

Nearly a fifth of people turned down for a loan

Annie Kane

Annie Kane is the editor of The Adviser and Mortgage Business.

As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts. 

Contact Annie at: This email address is being protected from spambots. You need JavaScript enabled to view it.

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