A survey of 14 lenders carried out by Iress found that the percentage of cases offered within 14 days had dropped from 56% in 2013 to 43% this year with medium-sized lenders seeing the sharpest fall.
Lenders with a market share of more than 0.9% but less than 5% market share saw their application-to-offer times drop by 46% leaving them with just 39% of their business going to offer within this timeframe. Lenders with a market share of less than 0.9% were able to produce a mortgage offer within 14 days in 32% of their cases, a 12% reduction on their turnaround time in 2013. The largest lenders in the market, those with a market share greater than 5%, improved their service levels by offering 59% of their cases within 14 days, 6% more than they were able to do in 2013.
There has been a 1% improvement on the number of cases going to offer within 14 days since 2014.
Cases going to offer within 10 days have dropped by a third since 2013 to just over 25% but have risen by 4% from 2014.
Sarah Wilde, BSA mortgage policy adviser, said: “Many building societies individually underwrite which allows them to handle more complex applications from individuals who are not well served elsewhere in the market. Whilst the time from application-to-offer may not in all cases be back to pre-MMR levels, it is positive to see in this report that the overall trend from 2014 is showing a decrease in turn around times, and a rising number of 10-day or less cases. Much has already been done to streamline processing and this activity will continue as we move into MCD implementation.”
The productivity of mortgage processors and lenders has also decreased as manual checking and a rise in the number of supporting documents needed make applications longer to assess. The work rate of each employee processing offers and completions has dropped by 42% and 41% respectively.
Henry Woodcock, principle mortgage consultant at Iress, said that market fears about the impact of the Mortgage Market Review (MMR) had centred on how much longer it would take for the adviser to carry out a mortgage interview. “The time it takes to carry out the MMR-complaint mortgage interview won’t change,” said Woodcock. “But the space between the interview and the offer can be made much slicker.”
Woodcock said processing times are expected to improve in the next few years. He added: “Now that the MMR is working the industry needs to think how to make it work better. We need to use more digital methods to connect to services needed to support the application which automatically retrieve and feedback the information requested. We need a synergy of automation and human interaction.”
