In our latest article Greg Cunnington, our Director of Lender Relationships and New Homes, looks at how the return of the purchase market has impacted mortgage lender service levels, and how we can help to circumnavigate these issues for you.
You may have read some recent press stories about Homebuyers waiting weeks for mortgages, as banks and building societies have been overwhelmed with applications following the reopening of the property market and the stamp duty changes.
There is no doubt that applications are taking longer to process than normal, even with the largest banks and building societies.
This is of course not ideal if you are looking to purchase and need to move quickly, or looking to remortgage and your current fixed rate shortly ends.
The good news is that an intermediary can help to circumnavigate these issues for you. We are aware of each lender’s current timeframes, so we can look to submit the application with a lender operating more quickly if needed.
Why are mortgage applications being processed slower than normal?
The answer to this is in two parts which combined make the overall processing times even slower still. Firstly lenders are still dealing with Covid-19 staffing issues with employees working from home or reassigned to other areas.
Secondly, lenders are struggling to deal with the huge surge in application volumes since the stamp duty changes. This would have caused a degree of disruption even before the lockdown.
Because of this lenders, although still open and keen to lend, are still facing unprecedented operational challenges. They still have an obligation to check the applications they receive are affordable for the customer circumstances and this takes time. Failing to do this could lead to customers having greater issues further down the line.
In order to reduce the volume of applications they receive lenders have been changing their criteria and increasing rates, as we covered in our recent article.
Because of this it is now more important than ever to keep up to date with what’s available. Alexander Hall has access to the largest range of mortgage products. Please click on this link to see what's available.
Manual assessments
Another factor slowing down application times is that some need more scrutiny than others. This is particularly the case for clients who are self-employed, a client that is on furlough, or where additional income is being used. These more detailed manual assessments mean that we are seeing longer application processing for these clients. Current timeframes of up to 13 working days for an initial assessment are common with some of the larger lenders, compared to less than 5 working days prior to lockdown.
How an intermediary can help?
As mentioned earlier in the article, a good intermediary will monitor each lender’s current timeframes. As such, if your purchase or remortgage application needs to move quickly, for example if you have a set completion date or your current fixed rate shortly ends, we can ensure your application is submitted with an appropriate lender based on their current service levels.
We also know which lenders will require a more detailed manual assessment based on your scenario, so we can advise accordingly here also.
Most importantly, we have exclusive access to the decision makers and escalated service teams with many lenders. This means that by using an intermediary such as ourselves your application will be reviewed quicker than if you use a lender directly, and also that if any issues arise we are on hand to help smooth these through with the lender to avoid long delays.
Client Q + A
As part of these series of articles we are hoping to answer as many of your questions as possible, as we know this is a worrying time and many of you are worried on the impact to your personal finances and mortgage.
We received lots of questions this week so apologies we could not answer them all. There are some common themes among the questions. Aside from more general themes which I’ve covered in this article, by far the most common two themes relate to mortgage availability for furloughed staff and for self-employed people, so I have selected an example to provide a comprehensive answer that covers both.
A client has said:
Hi, I’m full time employed, now back at work but was on furlough until the 4th July. My husband is self-employed and didn’t work for 2 months due to Covid. He received the self-employment grant in May, how will this affect our mortgage application?
My response:
I know there has been some nervousness on this topic, both in relation to the furlough scheme and for self-employed clients, and some confusing and misleading press articles on what the mortgage availability is like for these individuals currently. We have been receiving a lot of enquires from clients on the back of these, worried about their current mortgage options. The good news is that all major lenders remain open for self-employed applicants, meaning we can help with your mortgage enquires as always.
To start with your furlough scenario, as you are now back at work most lenders will be fine to accept your full income. If you have been back less than a month, a reference from your employer to confirm you are back and your updated income details will likely be required. You can see more detail on mortgage options for clients on furlough, or returning from furlough, in our recent article by clicking on this link.
For your partner, what we have seen is that most lenders will now assess self-employed clients’ applications in more detail. Some lenders are now requesting the latest 3 months business bank statements for all new self-employed applications. These applications will then be individually assessed by an underwriter, bypassing any automated decisions they may have made previously. This is because the lenders want to see the sustainability of income has not been materially impacted if you are looking to use the latest available annual income figures to support the mortgage borrowing.
A good intermediary will be able to help guide you through these documentation requirements, and can also speak to the underwriters at the lender pre application to get a good idea on if your scenario would fit their current criteria.
As he has taken the government grant, the lender will want an explanation as to why this was required and if his ongoing income is affected by Covid-19. We have had applications agreed with no issues for clients who have taken this grant, supported by documentation and a detailed explanation as to why this was taken out and how the business is faring. This is definitely a scenario you will want an intermediary to help with, to ensure this goes to a lender who can take a flexible approach and is presented in the correct light.
Please get in touch with us if you need any further advice. You can email us at [email protected] or use the contact us page on our website – click here.
This article was originally posted in What Mortgage online. You can see the original article here. Please note this will launch a new web page.
