The Jubilee and Olympic celebrations brought an early start to the summer holidays and, as predicted, a noticeable lull in activity for the mortgage market. It seems this quieter period has landed at exactly the right time for lenders struggling to manage their existing pipeline of applications.
Our own broker businesses reported that the majority of lenders are taking upwards of 20 days to get a case to offer, the longest current turnaround being 57 days. Buy-to-let lenders seem to be struggling the most. All but two lenders reported service issues last month and only last week we saw headlines tackling the subject in the mortgage trade press.
Any sudden spike in consumer interest, for instance, the rush prior to the end of the stamp duty holiday in March or responses to major marketing activity or the launch of a compelling rate, can obviously inundate a lender with applications and as a result their processing capability can suffer for months.
It seems now is evidently a good time to ease off the marketing activity until back-office teams can catch up. It is also an ideal time to concentrate on business processes before business volumes recover after the summer.
Association of Mortgage Intermediaries director Robert Sinclair suggested that the capacity of UK lenders was cut at the peak of the credit crisis and has never been rebuilt. It is clearly true that many lenders have stripped back resource on the intermediary side, often repurposing staff in consumer-facing roles.
And it is no secret that the application process has become significantly more demanding as lender requirements have steadily become more onerous, which requires more resource to perform mortgage processing.
In July, Barclays launched its packaging education campaign to help brokers improve the packaging of applications before they are submitted to the lender.
As intermediaries, we cannot ignore our responsibility to ensure customers know exactly what each lender requires to achieve an offer in an acceptable timescale.
By critically reviewing our own processes, brokers could find ways to streamline procedures to ensure transparency, leaving clients no room for confusion.
Some lenders have assigned dedicated teams to contact brokers when key documents are missing in order to speed up their turnaround times. Our staff have already noticed a real improvement and naturally welcome this deliberate commitment.
Barclays intermediary managing director David Finlay said: “Continuing to improve brokers’ experience is our top priority and that is why we have outlined a proactive and transparent approach when submitting applications as we need to help clients receive our best possible service.”
In a recent Q&A session, Abbey for Intermediaries head of sales Jeremy Duncombe also encouraged brokers to use the lender resources available to them.
He said “Our average time from application to offer is just 10.3 days but many of our intermediary partners can reduce that figure even further by working closely with their BDM to ensure that their cases are fully packaged and that the correct income figure is used in every case.“
Brokers need to keep up the pressure on lenders to deliver turnaround times which are reasonable and which meet consumer expectations, not least as unexpected delays caused by lenders directly impact on the intermediary’s credibility with the customer.
Rob Clifford is chief executive at If I Were You