The problem is most acute in the South East, with over 70% reporting they were unable to find a loan, and slightly less critical in the Midlands, West and Wales (65%).
The principal reasons for the inability to find a loan are the tightening of lending criteria and the increase in deposits required as LTVs have been cut – both mentioned by 51% of respondents. After that, 23% of intermediaries cited withdrawal of/lack of availability of products as the impediment.
The problem has been encountered across all product types, with remortgages mentioned by 72% of respondents – reflecting the high level of demand for such products. This compares with 54% who were unable to source a loan for a first time buyer and 50% for a sub-prime borrower. Even with standard status borrowers – the category of customer least affected by the mortgage squeeze – 26% of intermediaries had not been able to meet their customers’ needs.
Peter Williams, IMLA’s executive director, said: “Our survey shows how intermediaries continue to battle to satisfy their customers, but the lack of availability of product is affecting all parts of the market. This shows how essential it is for the Bank of England and the government to work to ease the liquidity crisis in the market.
“The announcement of the extension of the SLS by the Bank was good news, but we need to see measures that will help the whole market rather than just a sub-set. It is vital that we have a level playing field and that all categories of mortgage provider, including specialist lenders, have access to funding that will help ease the log-jam for brokers and their customers.”
Brokers were asked what customers who were unable to obtain a mortgage did as a result. Inevitably, those looking to remortgage mostly remained with their existing lender at SVR, with 83% falling into this category. For first-time buyers, a large proportion rented instead of buying – this being the case for 40% of respondents. In fact, a small percentage of customers decided to sell up and rent (15%), while in 14% of cases the customer is facing repossession.