Half (50%) of people who have applied for a mortgage since July last year say they have seen their desired product withdrawn by a lender while they were looking to apply for it, new research has revealed.
Nearly three in 10 (27%) mortgage customers claim they missed out on a property purchase due to difficulties in getting a mortgage, according to the survey of 2,000 people across the UK and carried out in July 2023, commissioned by specialist lender Market Financial Solutions (MFS).
Financial information website Moneyfactscompare.co.uk says the average “shelf-life” of a mortgage hit a record low of just 12 days this month (July). This is the lowest average time on the market since its records started nearly 12 years ago.
In July 2022, mortgages were lasting nearly twice this period on the market before being withdrawn from sale, with an average shelf life of 23 days, according to Moneyfacts.
Paresh Raja, CEO of MFS, says: “The base rate continues to rise as the Bank of England struggles in its arm wrestle with inflation, and our research underlines how difficult this is making it for people navigating the mortgage market. With products being pulled left, right and centre, and with uncertainty so prevalent, mortgage customers are struggling to find the financial options they require on the high street.”
People scouring the market may find that a broker can help them to find a suitable mortgage deal. Many lenders recently signed up to a mortgage charter, giving borrowers who are struggling or who may experience difficulties more certainty and consistency over their options.
Under the mortgage charter, lenders will be able to offer borrowers a switch to interest-only payments for six months, and an extension to their mortgage term to reduce their monthly payments, with the option to switch back within six months. Both options can now be offered without an affordability check.
A statement from UK Finance, which represents the banking and finance industry, says: “Movements in swap rates – which are used to price fixed-rate mortgages – are outside the control of lenders. When there are changes, lenders may have to pause or withdraw products at short notice both to manage service, and ensure demand does not exceed the funding allocated for the deals on offer.
“Mortgage lenders understand the impact of short-notice withdrawals on both their customers and mortgage brokers. Whilst changes to products are time critical, mortgage availability remains strong across all LTV bands.”
UK Finance says lenders will honour a formal mortgage acceptance. This is different from a decision in principle, which is what borrowers may receive if they want to know how much they could potentially borrow.
