The number of rejected mortgage applications has increased by 60 per cent in the past six months.

More than 738,000 home loans were turned down by mortgage firms since March as banks and building societies enforce stricter lending conditions, according to research by analysts MoneyExpert.com.

The research confirm earlier figures released by the Council of Mortgage Lenders which showed lending for house purchases and remortgages have declined by 11 per cent and 12 per cent respectively compared with August last year.

In the six months to March, figures showed that around 463,000 people had a mortgage application rejected. This figure has since risen to 738,000 in the six months to October as Bank of England interest rate rises hit borrowers.

Five Bank of England rate rises have been pushed through since August 2006, with two coming since May 2007, pushing the base rate from 4.5 per cent to 5.75 per cent and adding around £1,320 to the annual cost of a typical £150,000 variable rate repayment mortgage.

Applicants aged between 25 and 34 were worst affected according to the research. Around four per cent of people in this age bracket have had an application turned down – around 382,000 young mortgage applicants.

Since March this year, the percentage of people classed as a “first time buyer” has also dropped by 20 per cent, according to the comparison firm Moneysupermarket.com.

The site suggests the prevalence of buy to let landlords and rising immigration resulting in a dwindling pool of properties may be behind the sharp decline.

The research also shows that homeowners are increasingly turning to fixed rate deals of between one and five years – 48 per cent of borrowers are on a fixed rate mortgage of between one and five years, compared to 39 per cent in March this year.

Sean Gardner, Chief Executive of MoneyExpert.com, said: “Life is tough at the moment if you’re applying for a mortgage. The financial environment is far more stringent than in the summer of last year and people need to be prepared for rejection.”

He added that it was up to the applicant to convince their bank that they can cope with repayments.