Half of homebuyers denied mortgage despite agreement in principle

Half of prospective homebuyers in the UK have been denied a mortgage during the COVID-19 crisis despite having an agreement in principle, according to new research from Butterfield Mortgages Limited (BML).

The mortgage provider suggested denials and delays as a result of coronavirus are putting a significant number of property transactions at risk, after its study indicated 50% of respondents had been denied a mortgage in 2020.

BML’s research, which comprised a survey amongst 1,305 current homebuyers and homeowners, also revealed 31% have lost their deposit due to delays in getting a mortgage, while another 52% of homebuyers have been stuck in a property chain due to challenges completing a transaction during lockdown.

The survey suggested 39% of homebuyers have also pulled out of purchasing a property due to COVID-19 despite putting in an offer, while 13% of homeowners have decided against selling their property despite having received offers. 

Elsewhere, the study found that 16% of homeowners have taken advantage of the UK Government’s mortgage payment holiday scheme. BML stated that another 14% have wanted to use the scheme but have had difficulty applying for it through their mortgage provider.
 
“The coronavirus pandemic took the property market by surprise,” BML CEO, Alpa Bhakta, commented. “The fact that many mortgage lenders withdrew products or stopped accepting applications during the lockdown has clearly had a damaging effect on property transactions.

“Today’s research shows that some buyers have lost their deposit, while others have missed out on properties having been denied mortgages despite receiving an agreement in principle.
 
“Positively, there are mortgage lenders who are continuing to issue loans and support homebuyers. What’s more, as lockdown measures are eased we are seeing activity return to the UK property market – as a result, demand that has been pent up over recent months might be released, resulting in a flurry of transactions in the second half of 2020.”

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