Prospective buyers have been denied a mortgage despite having one in principle as a result of the coronavirus, according to research by Butterfield Mortgages.
In a survey of more than 1,300 homeowners and prospective buyers, half of homebuyers said they had been denied a mortgage this year, despite having an agreement in principle (AIP).
Three in 10 (31 per cent) homebuyers also said they had lost their deposit, due to delays in securing a mortgage as a result of the coronavirus.
Additionally, more than half (52 per cent) of homebuyers surveyed said they had been stuck in a property chain due to challenges completing during lockdown.
The research, conducted between May 29 and June 2, also found that the coronavirus had led to some leaving the market altogether. Four in 10 (39 per cent) of prospective buyers had pulled out after making an offer, due to uncertainty relating to the coronavirus.
Meanwhile, one in eight (13 per cent) homeowners had decided against selling, despite having received offers.
Alpa Bhakta, CEO of Butterfield Mortgages Limited, said: “The fact many mortgage lenders withdrew products or stopped accepting applications during the lockdown has clearly had a damaging effect on property transactions.
“[As] lockdown measures are eased we are seeing activity return to the UK property market—as a result, demand that has been pent up over recent months might be released, resulting in a flurry of transactions in the second half of 2020”.
After first pulling their products from the market many lenders reintroduced lending at higher loan-to-values as physical valuations resumed in May.
However, many products at 90 per cent LTV were again withdrawn from the market weeks later due to "high demand".
Clayton Shipton, managing director at CLS Money, said his firm had seen “unprecedented demand” for mortgages since lockdown rules were eased.
However, he added that the buying process was being slowed down as many lenders were “still struggling” to keep up with demand.
Mr Shipton said: “This is causing uncertainty in the property chain therefore leading to frustrations for sellers and buyers”.
He added: “Patience is key, but I can’t see it getting any better for the rest of the year”.