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.
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.
Similarly, lenders being slow was the most common reason brokers did not opt to use their services, the survey found.
The report, which polled 424 brokers in May, showed Halifax won the prize for speediest lender with a rating of 93.2 per cent.
Halifax was also crowned ‘brokers’ favourite lender’ overall, with BM Solutions and NatWest scooping second and third respectively.
Tellingly, NatWest and BM also had the second and third best ratings for speed.
Specialist lenders struggled the most to turn around an application quickly but some “high street” banks also scored badly in the speed category, with Metro scoring 54.4 per cent, Barclays 63.3 per cent and Clydesdale Bank receiving the overall lowest score for speed at 42.4 per cent.
Mr Lakey said he would avoid most building societies if he needed a fast application turnaround, but also mentioned Clydesdale as a “no go” for deadline cases.
A Metro Bank spokesperson said: “We’re committed to providing the best in service and convenience for our customers and our brokers.
“We always work closely with our brokers to understand their feedback and help us improve in the future.”
The spokesperson said Metro had seen a 30 per cent improvement in its application to offer times this year.
A Clydesdale Bank spokesperson said customers were at the heart of what the bank did and stressed it was constantly looking for ways to improve its service, whether that be improving the speed or reviewing its policies to allow it to help more customers.
The spokesperson added: "We manually underwrite and individually assess many of our customers’ applications and while this sometimes can mean it takes a little longer, we believe it’s the best way to help customers with more complex needs."
Barclays declined to comment.
imogen.tew@ft.com
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