That’s according to a survey by Butterfields Mortgages which has uncovered evidence that many property transactions have been put in jeopardy because of mortgage application rejections and delays over the past few months.
A third of homebuyers, the survey discovered, said they lost their deposit because of delays in getting in a mortgage.
And as many as 52% said they were stuck in chain because of challenges faced in completing their transaction due to lockdown.
Alpa Bhakta, CEO of Butterfields Mortgages Limited, said: “The coronavirus pandemic took the property market by surprise.
“The fact that many mortgage lenders withdrew products or stopped accepting applications during the lockdown has clearly had a damaging effect on property transactions.
“Indeed, 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.”
Mortgage payment holiday rejections
Butterfields’s survey, which took into account the views of 1,300 homeowners or those in the process of buying a property, also found 16% of homeowners had taken advantage of the UK government’s mortgage payment holiday scheme.
This allows people who are struggling financially due to the pandemic to defer payments for three months. Earlier this week a report from the body representing mortgage lenders, UK Finance, said one in six borrowers taking advantage of the scheme.
But Butterfields’s research also discovered an additional 14% wanted to use the scheme but had difficulty applying for it through their mortgage provider.
Hesitation from buyers and sellers
Butterfields’s research also revealed how the pandemic had made many buyers and sellers hesitant when completing transactions.
Two fifths of prospective buyers had pulled out of buying a property, the study found, after having put in an offer. Meanwhile, 13% of homeowners had decided against selling their property even though they had received offers.
Despite this, Bhakta was optimistic about the market going forward. “Positively,” he said, “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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