The mortgage process is proving too much for almost one in ten (8%) first time buyers, who admitted that they were reduced to tears while attempting to secure their first mortgage, according to research from online mortgage broker Trussle.
Mortgage Process Proves too much for One in Ten First Time Buyers
That’s the equivalent of 27,000 first time buyers crying as a result of the mortgage process last year.
In the study of 2,000 homeowners, it was also revealed that roughly a quarter (23%) were forced to take time off work to make arrangements for their first mortgage. Applied to last year’s 338,000 first time buyers, this equates to 77,740 people.
Many find the traditional mortgage process to be opaque and time-consuming, with one in four (23%) borrowers reporting that they found the experience to be stressful, while 5% felt compelled to complain to their lender or broker about the service they received.
The negative experience so often associated with securing a mortgage is also leading to inertia among current borrowers. One in ten (9%) respondents – the equivalent of a million people – said that they’ve been discouraged from switching mortgage by their experience of being a first time buyer, while, for 13%, it’s actually discouraged them from moving home.
This switching inertia is costing UK homeowners billions of pounds every year, Trussle has found. There are roughly two million borrowers in the UK on a Standard Variable Rate (SVR) mortgage when they don’t need to be, and most will have slipped onto an SVR because they failed to switch when their initial term ended. A borrower on an SVR will almost always pay a higher rate of interest than they would on a competitive deal.
Trussle has calculated that the average UK borrower on an SVR pays £4,900 more in annual interest than they would on the lowest rate deal on the market – equating to £9.8 billion in excessive interest being paid by inert mortgage borrowers on SVRs each year.
The CEO and Founder of Trussle, Ishaan Malhi, says: “Buying a home is one of the biggest milestones in someone’s life and should be remembered with fondness, but, for so many, it’s an ordeal they’d rather forget. A lot of it comes down to the stress and inconvenience of the mortgage application process. It’s therefore understandable that so many people are reluctant to think about their mortgage when the time comes to switch, but the sad result is that homeowners are collectively losing billions of pounds a year.
“The good news is that things are improving, if in pockets. We’re already seeing dramatic progress in the mortgage customer experience, with the use of technology speeding up and simplifying the whole process. This in turn should help to address some of the causes of the inertia costing homeowners so much money.”
We’re reminding all portfolio landlords that the Prudential Regulation Authority’s new underwriting rules will soon be introduced. Get to grips with what they mean for you with our handy guide: https://www.justlandlords.co.uk/news/portfolio-landlord-underwriting-changes/