Mortgage demand is at unprecedented levels but consumers risk being thwarted by a “complicated” lending market that is shifting constantly, brokers have claimed.
Chris Sykes, mortgage consultant at Private Finance, described the market as in a “state of flux and more complex than ever”, with lenders making weekly changes to rates and criteria or withdrawing products altogether.
Mr Sykes said Private Finance’s brokers had been advising clients to start the financing process as soon as possible, especially with lenders operating on a “greatly reduced” capacity and longer timescales, given the high demand.
Carl Shave, director at Just Mortgage Brokers, agreed: “With uncertainty over the availability of products, brokers are having to advise clients that what is available today may be gone tomorrow and, where necessary, discuss the benefits of obtaining a larger deposit when possible.”
Similarly Adam Wells, director at Lloyd Wells Mortgages, commented that with the advent of robo-advice, the more complex scenarios would lead to customers approaching brokers for the “personal touch and experience, which is invaluable”.
In September, the Intermediary Mortgage Lenders Association announced it would be surveying members to identify the challenges to lenders that were straining service levels.
The trade body added that it wanted to use the insights to come up with possible solutions and work with intermediaries to address the market’s capacity challenges.
Kat Tymon, director at Mansfield Money, described the pandemic as a “learning curve for everyone in the mortgage market”.
She said: “Brokers have also been working hard to share information with each other, as in these difficult times we are all in it together.”
Commenting on IMLA’s survey, Robert Sinclair, chief executive at the Association of Mortgage Intermediaries, said: “While the strong levels of activity we are seeing is certainly a positive sign of the sector’s resilience, it is continuing to present difficulties for lenders as they battle demand.
“Whether we are advisers or lenders, it is vital that we work in partnership to find ways of overcoming these difficulties.”
The trade body added that it wanted to use the insights to come up with possible solutions and work with intermediaries to address the market’s capacity challenges.
New ways
Anthony Rose, director at LDNfinance agreed that lenders needed to find new ways of working during the pandemic to deal with business volumes better, while brokers could support when packaging and placing their cases.
Mr Rose added: “For lenders, their part of the bargain is better communication, both on product withdrawals and trying to get their response times down.”
According to IMLA, lenders have also been taking a more in-depth look at applications to ensure customers can afford their mortgage in the future, due to high levels of uncertainty over the economic climate and individual applicants’ incomes or job prospects.
The trade body added that the increase in applications being individually assessed by underwriters sometimes led to increased timescales to complete mortgage applications.
Stricter lending criteria
Private Finance’s Mr Sykes said brokers at the firm had seen minor blips in a borrower’s credit history lead to rejection “despite ticking all the other requisite boxes”, due to tighter credit scoring requirements from lenders.
He observed that the cautious approach taken by lenders meant the mortgage market was becoming “increasingly restrictive”.
Mr Sykes warned that with the new coronavirus restrictions for England announced by the prime minister last week, lenders would further scrutinise the affordability of applications from customers who have benefited from the coronavirus business interruption loan scheme (CBILS) or a bounce back loan.
Likewise Joanne Chapman, director and adviser at Plus Financial said that stricter lending criteria was causing a significant rise in mortgage applications being declined.
Ms Chapman expressed concern that a continued rise in declined applications could have a “detrimental impact” on property prices if supply outstripped demand.
She also said: “[The] reluctance to lend appears to contradict the government’s intention to stimulate the housing market and is leaving borrowers frustrated and confused.
“From a broker perspective, it is becoming ever more difficult to manage client expectations.”
In July chancellor Rishi Sunak announced a stamp duty cut until March 31 to “catalyse the housing market”.
But LDNfinance’s Mr Rose expressed his support for an extension to the stamp duty holiday.
Mr Rose said: “For the market to keep its legs next year, there should be an early announcement on government plans to extend the stamp duty holiday to take the pressure off buyers rushing for the March 31 deadline and prevent the market retrenching afterwards.”
chloe.cheung@ft.com
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