Last year, 18 per cent were turned down which is an increase of 6 per cent compared to results of a similar survey commissioned by BML earlier
Being accepted for a mortgage is a common worry among home buyers – but even some of the UK’s wealthiest people are turned down by banks.
Nearly one in five high net worth individuals have had their mortgage application declined in the last decade, according to research by Butterfield Mortgages Limited, which provides mortgages to prime property buyers.
The situation appears to be getting worse. Last year, 18 per cent were turned down – this is an increase of 6 per cent compared to results of a similar survey commissioned by BML in early 2019.
HNWI’s complex income structures and the ‘tick box’ nature of mortgage applications were largely to blame, according to the study.
Of those that had applied for a mortgage in the past decade – successfully or unsuccessfully – nearly two thirds (63 per cent) said they had struggled because of their complicated income structure or the fact that they did not have a monthly pay cheque. This was true of just 42 per cent of the wider population.
Meanwhile, 78 per cent of HNWIs said banks relied too heavily on rigid ‘tick box’ methods when assessing suitability for a mortgage.
As a result, 62 per cent of HNWIs said they had lost confidence in high street banks’ ability to cater to the needs of property investors and buy-to-let landlords.
They were also kept waiting longer. More than a third said they had to wait three months or longer to hear if their applications were successful, while this climbed to 58 per cent for HNWIs.
BML commissioned an independent survey of 2,008 UK adults, including 400 people with a combined investment portfolio of more than £100,000 deemed to be HNWI.
Alpa Bhakta, chief executive of BML, said: The credit struggles of the UK’s wealthiest may come as a surprise, but as today’s research shows, their ability to access and arrange financing is by no means guaranteed.
This is a long-term challenge, and as a result of their frustrations, high street banks are facing a loss in confidence from high net worth individuals. He also said that the challenges banks had experienced dealing with mortgage demand during Covid-19 had made the process even more difficult for the wealthiest borrowers.
As a general rule of thumb, the wealthier individuals are, the more complex their finances are likely to be, Bhakta said.