Mortgages  

Mortgage lenders 'lack flexibility', report warns

Mortgage lenders 'lack flexibility', report warns
Photo: Karolina Grabowska via Pexels

One in three UK homebuyers have experienced major issues when getting a mortgage, a survey has found.

According to an independent survey of 690 UK mortgage customers by Butterfield Mortgages, 38 per cent of UK homebuyers have had a property purchase fall through due to mortgage delays. 

The survey also found that 51 per cent believed the process of securing a mortgage is too slow, while 69 per cent considered the process to be a stressful experience.

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Additionally, the study highlighted the value mortgage customers place on having the support of a good lender, with 65 per cent believing this is key to succeeding in the competitive market.

The research also showed that customers wanted more flexibility from lenders, with 59 per cent believing mortgage providers rely too heavily on strict and rigid criteria when assessing applicant’s eligibility.

Furthermore, the study stated that 48 per cent of mortgage customers believe lenders do not provide adequate support to borrowers once the loan has been delivered.

Alpa Bhakta, chief executive of Butterfield Mortgages, said: “The research has uncovered concerns among mortgage customers with the levels of efficiency and customer care they are receiving from lenders, which should serve as a clear call to action for mortgage providers across the UK.

"As we emerge from the pandemic and buyers face a competitive market, there is evidently a need for greater flexibility and better communication", she added.

However, brokers have not experienced property purchases falling through, perhaps highlighting the importance of independent advice.

In response to the study, Chris Sykes, technical director of Private Finance, told FTAdviser: “Out of the hundreds of mortgages I have arranged, I struggle to think of any examples where the property purchase has fallen through due to mortgage delays."

However, he added: “This part really does shine a light on how important it is that before finding a property you get pre-qualified for finance either by a lender or by a broker so that you can go into any purchases confident that your purchase will go through." 

David Hollingworth, associate director of L&C Mortgages, said the regulation was in place to protect consumers.

He said: “The regulation put in place is there, in large part to prevent a swing back to more relaxed lending standards and to maintain a framework for sustainable and affordable lending. 

“With high house prices that can of course mean that some first time buyers will find it a challenge to borrow as much as they might like.”

Sykes added: “From a lender's point of view, I’m sure they would love to lend more money and have less stringent guidelines but the rules are there for a reason." 

A UK Finance spokesperson said: UK Finance does not recognise the headline 38 per cent figure in the report, nor does it believe the findings are representative of the mortgage market.