We all know that getting a mortgage approved is tougher than it was a decade ago and the reasons are sound, making sure that home owners can afford their monthly payments.
As a result there has been a lot of change, all for the good. But now there are suggestions that more change is needed, that the home lending market has to be more creative and adaptable so that it is in tune with a housing market that needs to cater for retired borrowers as well as young first time buyers.
What I would describe as a hard hitting piece survey which suggests that the mortgage industry is failing to keep up with modern borrowers’ needs, with 54% of applications failing for what most would regard as ‘normal’ reasons.
These reasons ranged from buying a property that had been converted, such as a barn conversion, buy a high rise flat to taking a dividend from your business and being self-employed, things that should not be a barrier to getting a mortgage. But such is the stress tests that are now applicable, they are.
Indeed, the research from lender Together says that part of the problem is that many mainstream lenders have failed to keep pace with the demands of different types of borrowers, for example being reliant on a computer automated approach, and outdated and rigid criteria.
It points out that people’s pay, working patterns and pensions have altered beyond all recognition from just 10 years ago, never mind 30 or 40 years ago.
Recent research from the Intermediary Mortgage Lenders’ Association (IMLA) also found that a significant proportion of the UK population fail to secure a home loan between an initial enquiry and the time they would receive a mortgage offer.
It is just not good enough that 66% of those aged between 18 and 34 who took part in the Together research could not get on the housing ladder because of the way they live and work nowadays, largely due to not meeting some mainstream lenders’ criteria.
It is not acceptable that 46% of over 55s were denied home loans, some because they were too near retirement age. Yet we live in an era when the retirement age is being pushed further and further forward.
Then there is the issue of mortgage prisoners, those who want to remortgage but do not meet new criteria for a home loan even although they want to switch to a cheaper rate and therefore pay less.
Christopher Woolard, executive director of strategy and competition at the Financial Conduct Authority (FCA), told a conference in London that all lenders, including those who are not regulated, need to offer solutions and to do so they need to be creative, adding that this could be affecting tens of thousands of home owners.
Another piece of research has found that almost a quarter, 23%, of home owners, the equivalent of 2.5 million people, experienced stress during their most recent mortgage application, with poor communication and lack of transparency the main reasons.
The study from online broker Trussle highlights the need for the mortgage process to be radically improved for the well-being of home owners. It found that 14% home owners said they rarely understood where they were in the process, while 13% found the way that deals were advertised was confusing.
Another stress trigger is the amount of time required to make phone calls during the application process with 27% of borrowers saying that they would have preferred to complete the whole process online.
It is clear that the mortgage industry has to drag itself into the current age of technology with perhaps a combination of more transparency, better communication and apps and online processes holding the answers.