Mortgage Problems Scupper 1/3 of Property Sales

More than one-in-three house purchases in the UK fall through due to mortgage problems, research from the Nottingham Building Society has shown.

This highlights the importance of securing the right mortgage early on in the house buying process and also ensuring good contact with your mortgage broker or provider.

“It is worrying that the successful outcome of many housing transactions relies so heavily on people getting the right mortgage for them very early on,” said Su Snaith, Head of Estate Agency at The Nottingham.

“Selling or buying a house does not have to be stressful but with hundreds of thousands of transactions failing every year it is clear that people need expert support and advice throughout the process. There is a limit to what you can do to stop people changing their minds but finance should not be an issue,” Ms. Snaith added.

The UK housing market suffered a slowdown in July and early August, linked to the seasonal summer lull and concerns over the EU referendum result. However, there have been more recent signs of a recovery.

Data from HMRC show that after slipping to a total of 73,460 house purchase completions in April – following the introduction of new stamp duty rules for property investors – transactions have slowly recovered. In June there were 101,840 property completions, rising to 107,620 in July and 109,630 in August.

More recent figures on mortgage, meanwhile, also suggest the drop in confidence was short-lived. The Council of Mortgage Lenders’ (CML) August mortgage lending survey showed gross mortgage lending totalled £22.5 billion in August, a 7% increase from July’s £21.1 billion and a 15% rise from August 2015.

The CML added this was the highest lending figure for the month of August since 2007 when gross mortgage lending hit £33.6 billion.

“Sentiment in the market recovered in August,” said the CML’s senior economist, Mohammad Jamei. ”This recovery in sentiment is likely to be down to a number of different factors, including the Bank of England’s monetary stimulus and its introduction of the Term Funding Scheme in August.”

Mr. Jamei said the CML is expecting a further increase in mortgage approvals later in the year – likely reflecting the lower rates of mortgage interest deals available. However, he added that any increase is expected to be below levels seen earlier in the year as “affordability constraints and lack of properties on the market for sale continue to bear down on borrowers.”

As the mortgage market stages a recovery from the slowdown recorded in June and July, home-buyers must do their best to select the right deal for them, including using the right lender.

However, the Nottingham’s research shows mortgages aren’t the only potential problem for home-buyers and sellers in the UK. Surveys were also a problem for 25% of those surveyed while 17% of respondents said a buying and selling chain caused problems leading to a sale not being completed.

These surveys and data highlight the importance of working to secure the right mortgage, for the right house to suit the buyers’ financial situation. Buying a house is a major purchase that comes with its share of stresses – some research and organisation can help keep them to a minimum.

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