Slow lenders push brokers to more expensive mortgages

Slow lenders push brokers to more expensive mortgages

Consumers are missing out on the cheapest mortgage deals due to delays with their application processes, brokers have said.

Brokers told Financial Adviser the speed at which a lender can turn around a mortgage application often played a “huge part” in their recommendation if the client is working to a tight deadline or is in a bidding war for a property.

However the lenders who can be relied upon to process an application in the time needed were often not the ones offering the cheapest or most suitable mortgage product for the client, meaning consumers could end up paying hundreds of pounds more because the cheapest lender was unable to meet the deadline.

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Nick Morrey, product technical manager at John Charcol, said: “Brokers definitely look to other lenders than the absolute cheapest overall if there is a time limit on the application and the cheapest lender is known to be slow.

“That’s part of good broking — a good broker should understand a client’s needs and circumstances, part of which is cost but another part is speed of transaction.”

As the broker was likely to ask the client whether to opt for the cheaper of the two or the faster application time, Mr Morrey admitted this did “sometimes put the client in a bit of a tricky situation”.

He added that in today’s “mortgage price war” — where lenders are working for small margins as rates are pushed lower and lower by fierce competition — the difference in price between the cheapest product and the “thirtieth cheapest product” was sometimes insignificant, however.

Shaun Church, director at Private Finance, agreed, adding that it “makes the whole process a bit futile if the lender cannot complete the application in time”.

He said: “It does not come into the decision that often, but we would need to concentrate on mainstream lenders who have an online process so we didn’t have to handle post or anything like that if there was a deadline.”

But Alan Lakey, director of Highclere Financial, said it was a “real issue” that consumers were forced not to choose the best deals in the market purely because of a lender’s processing speed.

He said: “I have had clients lose properties because of slow processing speeds in the past, so it’s a real fear and brokers make the decision based on a real risk.

“In an ideal world, we would be able to get a client the cheapest deal and not have to pick and choose based on their application time.”

Mr Morrey said brokers also wanted to recommend a mortgage policy for their clients with the knowledge the lender would provide a good customer service, and the delay in processing and responding was part of that package.

The Mortgage Lender Benchmark report, published earlier this year (June 5), showed ‘speed to completion’ was the most important factor on whether an intermediary would recommend the lender for both the first half of 2019 and the latter of last year.