Are you worried that your mortgage application is taking ages? Don’t read anything into it as it’s probably not you – it could well be your lender…
If you have applied for a mortgage and your application seems to be taking forever, it may not be a bad sign and doesn’t necessarily mean that you won’t be accepted. Even if it feels like the days have been rolling by and the silence is deafening, there may be no cause for concern. Since lockdown, lenders have been struggling to manage their workloads for a variety of reasons. Applications that would normally take just a few days to complete can take up to a month. Banks offering 90 per cent mortgages in particular have struggled to process applications promptly.
Our advice is to try to keep an open mind and don’t read anything into it. Just to put your mind at rest, here’s why you need to be patient…
1. Lockdown was sudden
When lockdown started, many staff began working from home and had minimal time to prepare for it happening. As a nation, we were given very little notice about it and many companies were caught short. We were all confined to our homes with staff having limited access to files and records.
2. There is a backlog of work
Even now that many restrictions have been eased, some staff are still working remotely and there is a backlog of work and applications which will take time to process. Staff are still catching up.
3. There have been enquiries about mortgage holidays
Lenders have had more calls to contend with, as they have been contacted by more of their existing customers about mortgage holidays. They have had more enquiries to deal with on a scale that is unprecedented.
4. The property market is busier than ever
The property market has just had its busiest month on record according to property website, Rightmove. Sales worth £37 billion were agreed from mid-July to 8 August – the highest monthly total in ten years. More people have chosen to move since lockdown. With remote working on the increase, many people have decided they need a home with space for an office, while others have quite simply decided they need more space. Some people living in flats or in smaller homes with limited land have decided they need a proper garden. And there has been pent-up demand, as the property market was pretty much shut down from 23 March until 13 May when restrictions were in place.
5. The Stamp Duty Holiday has generated more interest
The Stamp Duty holiday announced by Chancellor Rishi Sunak on 8 July boosted the property market as buyers strive to organise their house move before it comes to an end on 31 March 2021. In essence, buyers can save money on their house purchases as Stamp Duty has been cut on properties up to £500,000, whereas previously it was only at zero on properties up to a value of £125,000.
6. Demand for mortgages is high
There has been unprecedented demand for mortgages as more people want to move. ‘We’ve seen lenders withdraw products, which has been pretty well documented, and now we’re seeing an increase in interest rates,’ says MBA’s Sales Manager Phil Leivesley. ‘This is simply to stave off demand. Once demand begins to subside, or lenders can find a way to increase their capacity, or both, we’re likely to see a return to a market that looks broadly like where we left it before COVID-19 arrived on our shores.’