Mortgages  

Individual underwriting lack is biggest issue for customers

Individual underwriting lack is biggest issue for customers

Proving affordability and a lack of individual underwriting are the biggest issues facing homebuyers and remortgage customers trying to secure a new deal with lenders, according to new research.

Research conducted among a sample of 100 mortgage advisers by Pollright Research last month, on behalf of specialist lender Kensington, found that 47 per cent of brokers believe underwriting is a major issue for borrowers, and 46 per cent identified issues in proving affordability.

Minor issues with credit history were identified as a big issue by 38 per cent of brokers.

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The study showed mortgage advisers are also concerned about the number of clients being rejected by lenders, with a quarter of those questioned expecting the number to increase over the next year.

Over the past year, 47 per cent of brokers said a fifth of their clients have encountered issues in securing a mortgage deal, with 20 per cent of brokers say 20 per cent or more of their clients have been rejected by one or more lenders before securing a deal in the last 12 months.

Steve Griffiths, head of sales and distribution at Kensington, commented that mortgage customers are increasingly turning to brokers to secure deals, as reflected in the growing market share for intermediaries against direct lenders.

“However brokers are clearly also experiencing issues in placing business and are having to work harder to ensure borrowers can access mortgage finance which is why we are investing to help intermediaries identify and support specialist customers.

“Lenders can help brokers by taking a more individual look at applications, rather than simply relying on standard models of affordability and income.”

Whilst announcing fourth quarter figures for the sector, Paul Broadhead, the Building Societies Association’s head of mortgage policy, said that many societies have benefitted from their individual approach to underwriting, which benefits consumers who do not quite fit the borrower profile of mass-market automated lenders, or for those who are looking for self-build or family guarantee style mortgages.

Around 36 per cent of those surveyed said the biggest issue preventing clients securing a deal was proving income if they are self-employed, with fewer lenders willing to consider applications from people working for themselves.

A similar number blamed standard lending models, stating that 33 per cent of their clients have fallen foul of computer models.

However, just 22 per cent of brokers said their clients have encountered problems in raising deposits for mortgages, despite concern about high loan-to-values and rising house prices.

peter.walker@ft.com