Julian Knight: Can lenders cope with this new mortgage rush?
After shedding staff in the crisis, they are now struggling to recruit fast enough to meet demand
Personal Finance Editor
Saturday 08 February 2014
In these days of journalists tied to their desk for much of their working week, I think more of us rely on our personal experiences for story inspiration.
This week, for instance, I have been in touch with my mortgage provider after a remortgage application – I am coming to the end of my current deal – had been delayed for an inordinate amount of time.
Obviously, I was concerned that my personal details might have been misplaced, so I gave my lender a call. I was told that they were snowed under and that had been the reason for the delay.
This set my news antennae twitching as I recalled that during the property boom of the first half of the last decade, the likes of Santander (then Abbey) had endured tremendous problems fulfilling mortgage applications.
So could my own mortgage provider's problems be a sign that we were in a similar place – that demand was too great, that they simply didn't have enough staff to cope?
It turned out in my provider's case that it was simply a question of the wrong batch of pre-paid envelopes being sent out and they were on the case. In fact they said they were coping with demand just fine.
I then called Andrew Montlake at the financial adviser Coreco, who has forgotten more about mortgages than I have ever known, and I asked him if he had heard of any problems at other lenders in terms of delays to mortgage applications. "Funny you should say that," was his response.
In short, although it is nowhere near as bad as it became on occasions during the last boom, it does seem that some lenders are struggling.
What has happened is that when new mortgages dropped like a stone from around 130,000 a month to just 42,000 at the depth of the financial crisis, lenders shed staff in droves.
That's understandable when you think about it. If you were in a business where two thirds of the custom vanished almost overnight then you'd expect job losses to follow.
However, with the advent of Funding for Lending and Help to Buy, the mortgage market has returned to vigorous health (although interestingly we are still only at two thirds to three quarters of historic norms as far as the number of new mortgages is concerned) and some lenders simply can't recruit qualified people fast enough.
As a result, there do seem to be delays. And, if they are being encountered by the likes of Mr Montlake – who arranges thousands of mortgages for his clients each year – then what hope is there for the rest of us?
There is a very serious side to all this. Whether or not I am delayed by a week in switching from one deal to another is not that important. However, if I were trying to buy the house of my dreams, and against stiff competition from other buyers, then a delay of even a couple of days arranging a mortgage could mean the vendor losing confidence in me and the sale falling through.
In fact, during the last boom I faced that exact situation due to administration error.
I do hope the Financial Conduct Authority is being proactive and ensuring that lenders are putting the support structures in place so they can fulfil the business that comes to them.
Listen to the insurers
Like me ,you have probably been horrified by the terrible images of people's homes and lives being ruined by the inundation of water in the Somerset Levels.
I don't know enough about whether dredging is good or bad to comment, but I do know that for well over a decade the insurance industry has been warning that large swaths of the UK are practically an uninsurable risk such is the likelihood of flooding.
All the time, governments of all persuasions have got away with spending the bare minimum on defences.
Now that we have seen a prolonged flood event – where people wonder if they will ever be able to occupy their homes again – I hope this may prove a defining moment when we collectively grasp the major implications of what rising river and sea levels and the building on flood plains actually mean for our way of life.
In 2014, it is unacceptable that we allow the water to take parts of our country. Flood management and defences have to be moved to the top of our collective national priorities – which is something the insurers have been saying for years.
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