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There are still a number of lenders whom we are having trouble getting through to on the telephones and we are still having to sit and wait for a long time. Yet mortgage business is down 40 to 50 per cent so there are clearly less applications going through. Why are we still receiving poor service? Peter O'Donovan, Bestinvest, London

Chris parker Nottingham Building Society, Nottingham

Dear Peter,

We pride ourselves on delivering excellent service so I am pleased to say our research revealed the average time it takes us to process a mortgage application has reduced dramatically since last year. For example, the average turn around time for an application dropped by an average of five-and-a-half days when you compare June last year to June this year. If a client was just applying for a residential mortgage or remortgage they could now be looking at just a five day wait before having an offer made. At the start of the year, the mortgage market has seen a sharp decrease in the number of mortgage products available. This has meant lenders offering best buy products get inundated with a large number of mortgage applications in a very short space of time. This then inevitably has a knock on effect on the turn around time and can increase it by days. At The Nottingham we monitor our inflows carefully to make sure we are not overwhelmed by applications and can maintain our high service levels.

Brian Murphy Mortgage Advice Bureau, Derby

Dear Peter,

In the current unstable environment some lenders will be servicing less business, due to funding constraints, and as a result may have been forced to reduce their staff numbers. This will have a direct impact on their ability to service business to the standard advisers came to expect prior to the credit crunch. Currently the market is being dominated by the top six or seven players. These lenders are likely to, in some cases, be doing even more business than they have been historically. However, it is very unlikely lenders in this scenario will also be increasing their resources. If anything, service will remain a secondary priority. When a lender finds themselves at the top of the sourcing tables based around pricing they will invariably experience a major spike in business submissions. Most lenders try to ensure they manage their pricing to take account of anticipated business volume. However, with online applications, a lender can experience a week's business in several hours. The knock on effect of this can be a collapse in their service delivery and the consequent impact of dealing with that in the ensuing days and weeks thereafter. It is primarily funding issues that determine the amount of mortgage business lenders undertake and the rates at which they offer them at.

David Gibb Dunfermline Building Society, Dunfermline

Dear Peter,

The issues lie with a small number of lenders and not the market as a whole. Good service should be a given but unfortunately lenders are operating in difficult conditions that most have never experienced before. Business levels are down for the majority of lenders, which then gives them resourcing issues: do you continue with the same staffing levels for less numbers of applications or is the logical business decision to redeploy your staff to other parts of your business that presently require additional staffing? The other challenge facing a number of lenders is while overall volumes in the market are down some lenders have brought product offerings to market that have created spikes in levels of business received. With market conditions being so turbulent, lenders cannot afford to deliver products that appear too competitive as this would leave them exposed to receiving more volume than desired and creating further liquidity problems. Another contributory factor is the contraction by a number of lenders of available mortgage products over the last few months. The key for lenders is to avoid the out-dated practise of setting manageable backlogs and ensure that the correct numbers of staff are redeployed to ensure service standards do not fall. Ultimately this has a knock on effect on the level of service supplied - an unfortunate consequence of the market conditions we are all operating under.

Sarah Robson Council of Mortgage Lenders, London

Dear Peter

The funding squeeze is at the heart of this. As we all know, the closure of wholesale funding markets created a large funding gap. There is no longer enough funding to meet the overall demand for mortgages and the mortgage market is now predominantly funded by retail savings. This funding shortage is now causing a slowdown in the housing and mortgage market and we expect net lending in 2008 to be half last year's level at £55bn and gross lending to be around 21 per cent less than last year at £285bn. Where funding is available it is often in smaller tranches and is being snapped up quickly. Lenders are managing their way through this by frequently adjusting their product ranges and pricing to match the funding that is available and to control demand. These are essential commercial decisions in the current conditions. On top of all of this, lenders are also trying to maintain good service standards. As long as the shortage of funding persists, there will be fewer mortgage products. And this is more likely to feed through to reduced demand in the housing market. This is why we have asked the Treasury to intervene further and have proposed a course of action that would re-start wholesale funding markets to the Crosby review.a