Mortgage lenders explain sluggish application times

5 October 2020 | General

Mortgage lenders are taking longer than usual to handle mortgage applications, much to the frustration of potential homebuyers and their mortgage brokers.

This has been blamed on strong demand, Covid-19 heightening application complexity and, with buy-to-let, a difficulty in scheduling surveyor visits to tenanted properties.

At the time of writing Santander is taking 26.2 working days for buy-to-let applications to go to offer via a broker.

Meanwhile for The Mortgage Works (Nationwide’s buy-to-let branch) it currently takes 25 days for a standard buy-to-let application to come to fruition, and 34 days for both portfolio and limited company cases.

On the residential side it’s less extreme but the process is still slow, as NatWest takes 22 days to handle purchase applications and 21 for remortgage deals. Nationwide spends 23 days on standard residential and 24 for referred, while Santander takes 21.3 days.

A Santander spokeswoman said: “We’re sorry that the processing times are slightly higher than we would normally work to, and can assure customers that our team are working hard to process the high volume of mortgage applications we’re receiving across both residential and buy-to-let mortgages.”

When asked about these delays, a Nationwide spokeswoman said there has been strong demand due to the stamp duty holiday.

Also, as one of few lenders handling 90% LTV cases, that has heightened the number of applications the lender has received.

Unsurprisingly Covid-19 was also mentioned, which is said to have led to some cases being more complex, resulting in applications being thoroughly reviewed by underwriters.

When it comes to buy-to-let, both Nationwide and Santander mentioned that it takes time for surveyors to enter tenanted properties in the current climate, which is making applications take a particularly long time.

Nudim Akhtar, mortgage & protection consultant at Contractor Mortgages Direct, said: “20-plus days for an initial underwrite is a failure in my opinion, and definitely not fair on the borrower.

“Simply increasing rates to deter borrowers is not the answer.

“Where they are unable to service the application in a fair timescale maybe the lenders should stop lending.

“Either that or they could have a senior underwriter look at the application at the beginning to make sure the documents underwriters require are there and in order.

“Underwriting understandably has become more complex, but triage teams could become more widely available to go through the application at submission to ensure it has best chance of acceptance on the first underwrite.”

It wasn’t all negative however, as Akhtar reserved praise for how two lenders are handling this situation.

He added: “Halifax in my opinion is way ahead of the game. They have case mangers who are so helpful on application that no other lender can really catch up with them in terms of service delivery.

“Then you have Coventry Building Society, who have the most pleasant telephone manner one could ask for.

“Other lenders really need to have the customer at heart rather than filling their boots. It is the usual suspects who are delivering a shoddy performance now.

“Humans make a lender – not systems and processes.”

This post has originally been featured in Property Wire.