The service standards of mortgage lenders have come under fire a lot recently, with criticism levelled at the length of time many lenders are taking to process documents for mortgage applications, reply to queries and connect with brokers over the phone.
Many reasons have been attributed to this fall in service standards including shortfalls in the post-pandemic workforce, consecutive rate rises and increasingly high demand for mortgage products, all of which are placing significant pressure on lenders’ operational standards.
Similar challenges are being seen in the second charge lending market with consecutive rate rises impacting on response times, which in some cases are currently taking up to seven days from the initial inquiry.
This is unheard of in this sector of the mortgage market where speed and access to funding is critical and swift turnaround times are much more commonplace.
The slowdown in response time for the second charge market is not really much of a surprise however, given the fact that the sector is experiencing a boom in growth for which many in the sector are not prepared.
This can be seen in the latest figures from the Finance and Leasing Association which show that the value of new second charge mortgage business reached £127 million in April 2022, a 54% increase on the previous year.
This upward trend in growth and increased demand for products is expected to continue as we head into the second half of 2022, with more rate increases, rising inflation and accelerating living costs acting as key drivers for growth, as more brokers and homeowners start to acknowledge the advantages of a second charge loan as a quick way to raise equity while retaining the preferential rate on their first charge mortgage.
The increased recognition and uptick in growth is fantastic news for the second charge sector, but it seems a lot of lenders are not geared up for the sudden boom in demand and this is having a knock-on effect on service levels, increasing broker frustrations and resulting in criticism that is tarnishing the industry’s reputation.
But instead of hitting out at service levels and pointing the finger at those companies struggling to meet demand, the mortgage industry should be looking at ways to help alleviate the pressures facing lenders as the rush to lock in rates continues to impact on service levels.
Obviously, improving resources is the key to getting ahead of the curve, but addressing this problem can take time and is no easy fix, particularly in the current economic climate.
For those brokers struggling with the delays to service standards, working with a specialist distributor that understands which lender has the best and most efficient service levels at any one time could help to alleviate the challenge of service delays.
A specialist distributor will help by taking on the workload and dealing with the lender directly, leaving brokers free to service the needs of other clients.
The last two years have been hard on the mortgage market, but as we enter this increasingly busy period of adjustment after a period of extreme uncertainty, it has never been more important for the industry to work together collaboratively and constructively to find solutions to the continued challenges we are collectively facing.
Jimmy Allen is broker account manager at Norton Broker Services
