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It wasn’t just the weather that went into meltdown last week, its meltdown at the major mortgage lenders too. Most, if not all the major lenders, are now suffering service delays the likes of which I have never seen.

Reasons for mortgage lenders’ meltdown

Covid is of course the culprit. But there are many reasons why this is happening, so in the interests of efficiency I have condensed them down into the main points below:

• Overseas operations not functioning. Many of the large banks have overseas operations – these overseas teams are not working at the moment. Call centres in India and Manila have been particularly badly hit. Therefore servicing is being undertaken in the UK instead.
• Reduced home working capacity. Some lenders have been unable to fully set up their customer servicing teams from home, thus reducing their capacity to handle enquiries.
• Re-deployment. Some specialised mortgage teams have been re-deployed to deal with payment holiday issues, again causing an issue with capacity to handle new business.

• High demand for lending. Demand for lending is at record levels creating additional pressure on already stretched resources.
• Manual underwriting. The underwriting in many cases is being done manually especially for self-employed customers, furloughed employees and those with payment holidays. This is slowing down the process too.
• Case escalation more complex. As underwriters themselves are working from home, case escalation is more complex and slower as ad-hoc review meetings and decision making needs to be planned in.

Up to 15 days to process mortgage application

This may not seem like a big problem, but if you need to move quickly as your product is up soon, or you need to move home, going round in a seemingly endless circle of delays can be a very real issue.

So it feels like a very real meltdown at the major mortgage lenders.

Some lenders are taking up to 15 days to deal with an application, so just a few mistakes along the way (many of which are from the lender in the first place!) you can then see an application take a month or more to process.

We haven’t seen mortgages take this long to process since the 1990’s (trust me, it has been that long as that is when I started), so naturally everyone starts to worry that something is wrong when that isn’t the case.

Good broker the difference to making a deal happen

Having a good broker in your corner has never been so valuable as we know how to package a case to minimize the delays as much as we can. And if needed, we can manage the expectations of the agent and/or seller. This really can be the difference between making a deal happen or not at present.

I do feel this is going to be an issue for the foreseeable future and one that may get worse before it gets better. So now more than ever, we all need to work as a team to get things done and show some patience and humility along the way. So much easier said than done…

New referral scheme

On that note, a very timely reminder of our new referral scheme below. If you know anyone that needs or wants a mortgage, putting them our way really will reduce stress levels at a tough time and they will be thanking you for it!

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