BrokerDec 8 2022

Mortgage lender satisfaction at lowest levels since pandemic

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Mortgage lender satisfaction at lowest levels since pandemic
Credit: Rocketmann Team/Pexels

Broker satisfaction with mortgage lenders has dropped to the lowest level recorded outside of the pandemic.

Research released yesterday (December 7) by financial services review site Smart Money People, found that overall broker satisfaction with lenders has fallen bellow 80 per cent for the first time since 2020. 

The research, which included feedback from 751 mortgage brokers and 114 mortgage lenders, showed that overall satisfaction dropped by 1.9 per cent in the second half of this year to 79.3 per cent.

Smart Money People chief executive Jacqueline Dewey said the findings illustrate how UK lenders are struggling to cope with the impact of interest rate rises and the turbulence caused by the “mini” Budget.

“Brokers are frustrated by the situation they find themselves and their clients in, with constant changes and products being withdrawn after applications have been submitted,” Dewey said.

It's pretty rubbish still, hours waiting on the phone and the web chats are often worse than useless. Jane King, Ash Ridge Financial Services

She added: “Our analysis has found brokers are craving some stability within the market, and that brokers need support from lenders. They need to be able to rely on and have confidence in lenders, and whilst processes adapt, communication remains key.” 

A key element of the research is the ‘Net Promoter Score’ which reflects how likely brokers are to recommend a lender.

The average score for all lenders within the benchmark decreased by 5.8 to 21.1, the second-lowest score recorded in the history of the benchmark.

Scores ranged from minus 54.5 to 59.3 for the lenders in the report.

The peak net promoter score for all lenders was recorded at the start of 2020 at 30.8.

Top performers

Halifax came out on top as the number one bank chosen by lenders for service levels while the West Brom was named the top building society.

Foundation Home Loans was both the top buy-to-let lender and the number one specialist lender in the second half of this year, while Canada Life was named as the top lifetime lender.

Building societies were the top-rated sector for broker satisfaction for a ninth time.

Another key take-away from the report was that brokers are struggling to keep up to date with rapidly changing criteria and rates, with 43 per cent relying on emails to keep on top of changes.

The housing market has cooled somewhat in recent months, with a significant slow down of house price growth reported in November.

Meanwhile the latest figures from the Bank of England show mortgage approvals decreased by 15.1 per cent in October 2022 compared to last year.

Jane King, chartered adviser at Ash Ridge Financial Services told FTAdviser she expected service levels to improve with a drop off in purchases, but from what she has seen this has not happened.

“It's pretty rubbish still, hours waiting on the phone and the web chats are often worse than useless. With the drop off in purchases I would have expected lender admin to get better but with staff still working from home it is still a shambles in many cases,” King said.

"It’s really hard to be critical of lenders"

Others in the industry were slower to criticise lenders citing the recent shocks experienced by the sector as the reason.

Following September’s “mini” Budget mortgage lenders were forced to pull hundreds of mortgage products from the market as they were unable to price them due to soaring swap rates.

Mortgage interest rates rose sharply as a result of this and the Bank of England’s decisions to raise the base rate, but in the past few weeks have begun to slowly fall.

In November the average five-year fixed rate fell below 6 per cent for the first time in seven weeks, to 5.95 per cent, according to Moneyfacts.

“It’s really hard to be critical of lenders, as it’s been a difficult market for everyone,” sales manager at mortgage broker MB Associates, Phil Leivesley said.

Leivesley described current lender service levels as a “mixed bag” and noted that the “mini” Budget fallout made lenders jobs more difficult.

It certainly feels like some calmness has returned  Phil Leivesley, MB Associates

“The lenders who remained in the market have received a significant level of applications, and this has directly led to the delays in processing applications,” Leivesley told FTAdviser.

He also pointed out that short notice product withdrawals meant lenders were dealing with cases from advisers that were not “perhaps packaged as well as they normally are”. This in turn contributed to reduced service levels, according to Leivesley.

“Thankfully we do appear to be seeing more lenders reintroduce themselves back to the market, and it certainly feels like some calmness has returned and business volumes are reducing. These two factors will likely see service issues resolve themselves pretty quickly,” Leivesley added.

Other brokers noted that it is the borrower who feels the worst effect of reduced service levels.

Manager at mortgage adviser Oportfolio, Louis Mason said: “Borrowers are having to wait for a long time for a response from the lenders and legal teams at the moment, which is stressful.”

Helix Financial Partners managing partner, Adam Stiles added that conveyancing firms also feel the knock on effect.

Stiles said: “Whilst lenders are slow in getting to offer, it's the lenders who give borrowers ‘free legals’ who are suffering. 

“Many of these conveyancing firms can't keep up with the amount of work, do not reply to any form of communication, and in many cases show little empathy in the financial plight of the borrower in making sure deals go through before the offer runs out.”

jane.matthews@ft.com & ruby.hinchliffe@ft.com