Mortgage applications are now taking up to two months to be approved as banks and other lenders examine the bank statements and bills of applicants. This extended timeline follows the introduction of strict new lending rules.
In April 2014 legislation was introduced that requires banks and building societies to perform deep and comprehensive checks on the spending habits of all applicants before approving them for a home loan.
This measure is intended to confirm that lenders do not loan too much money to people who could potentially have trouble meeting their repayment obligations in the future.
Now estate agents are warning that mortgage applications are routinely taking 50 days and up to be processed due to the heavier amount of administration involved.
Pursuant to the Mortgage Market Review (MMR), mortgage applicants face personal and probing questions that range in scope from how often they provide gifts to their spouse / partner to whether they intend to start a family in the near future.
Each individual lender selects their questions, which are designed to determine how much money the applicants spend each month and whether they can actually afford the amount that they are seeking to borrow.
Estate agents say that this new procedure has dramatically lengthened the amount of time it takes to purchase a home. In general, the process takes around two weeks longer than it did previously.
The National Association of Estate Agents said that the MMR is causing the mortgage application process to run more slowly, and evidence suggests that more than 50 days can transpire between application to mortgage offer.
This delays sales and results in uncertainty – which also brings a greater risk in the sale falling through.