Brokers are concerned that banks have pulled back lending which they say has frustrated the mortgage application process and made managing client expectations more difficult.
Some mortgage advisers have told FTAdviser about a number of cases in which lenders seemed “unwilling to lend”, were “not interested in business” or were “looking for ways to reject an application”.
But lenders have shrugged off the suggestions and said their "lending appetite" has not changed over the past months.
Craig Parkinson, consultant at Continuum, said: “It’s very difficult to get anything through with some lenders at the moment. Even firms that used to be looking for lending all the time, it feels like they are looking for a reason to reject it.”
Mr Parkinson said it seemed some banks and building societies were asking a lot of questions to find a reason to reject the application.
Martin Stewart, director at London Money, said he had heard anecdotally a number of lenders were being more cautious with their lending and were performing arbitrary assessments on income and expenditure and down-valuing on property or rental incomes to limit their exposure.
Daniel White, director at Champion Hall & White, also felt banks were being particularly “hard work” at the moment and said this had caused problems with clients.
He said: “It can make you look a bit silly to the client when suddenly lenders seem to switch it up. It makes mortgage brokers' lives difficult as we need to be able to have faith and confidence in how lenders work.
“They can be completely unpredictable and it feels especially prominent at the moment.”
Mr Parkinson said he tried to manage the expectations of clients but said it was frustrating to not be able to gauge a lender’s appetite.
According to Mr Stewart, some of his clients had not been able to achieve the asking price on their property due to the problem.
He also found that lending which his firm viewed as sensible was challenged by certain banks despite the broker feeling confident about the client’s ability to afford the product.
Mr Stewart thought political uncertainty, unstable house prices and a general sense of nervousness about the future were the main reasons some lenders were slowing down their lending book.
He also said house prices had risen so much over the past years there was “nowhere else for them to go”.
He added: “All of these along with a backdrop of slowing global gross domestic products will be one reason why cash will be seen as king in the months ahead.”
But Mr White thought the decrease in lending appetite could be down to the fact lenders’ business levels had exceeded what they could actually handle following the ‘mortgage price war’.
If the bank had a large influx of applications, this could result in delays in underwriting, longer turn-around times and the increase in rejections brokers were experiencing, he said.
According to Craig McKinlay, new business director at Kensington Mortgages, banks might be suffering from a sudden cut off from cheap funding from the Bank of England’s Term Funding Scheme, which had been an important source of funding for many high street banks and building societies over the past decade but closed over a year ago.
He thought this, alongside political uncertainty and subdued growth due to the increased competition in the mortgage market, had impacted on the volume of lending.
Mr McKinlay said Kensington Mortgages was continuing to grow its lending by targeting new segments.
Nationwide also confirmed it had not made any changes to its lending criteria.
imogen.tew@ft.com
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