Trussle study finds 8 per cent of people cry while attempting to get first mortgage
Close to one in ten (8 per cent) homeowners admit they were reduced to tears while attempting to secure their first mortgage, according to research from online mortgage broker Trussle. That’s the equivalent of 27,000 first-time buyers crying as a result of their mortgage application process last year.
In the study of 2,000 homeowners, it was also found that roughly a quarter (23 per cent) were forced to take time off work to make arrangements for their first mortgage. Applied to last year’s 338,000 first-time buyers, this equates to 77,740 people taking a day off in 2016.
Many find the traditional mortgage application process to be opaque and time-consuming, with one in four (23 per cent) borrowers reporting that they found the experience to be stressful, while 5 per cent felt compelled to complain to their lender or broker about the service they received.
The negative experience so often associated with securing a mortgage is also leading to inertia among current borrowers. One in ten (9 per cent) respondents, the equivalent of a million people, say they’ve been discouraged from switching mortgage by their experience of being a first-time buyer, while for 13 per cent, it’s actually discouraged them from moving home.
This switching inertia is costing UK homeowners billions of pounds every year. There are roughly two million borrowers in the UK on a Standard Variable Rate (SVR) mortgage who don’t need to be, and most will have slipped onto an SVR because they failed to switch when their initial term ended. A borrower on an SVR will almost always pay a higher rate of interest than they would on a competitive deal.
Trussle has calculated that the average UK borrower on an SVR pays £4,900 more in annual interest than they would on the lowest-rate deal on the market – equating to £9.8billion in excessive interest being paid by inert mortgage borrowers on SVRs each year.
Ishaan Malhi, CEO and founder of Trussle, commented: “Buying a home is one of the biggest milestones in someone’s life and should be remembered with fondness. Unfortunately for so many, it’s an ordeal they’d rather forget. This is largely the result of the stress and inconvenience caused by a complex and outdated mortgage application process.
“It’s understandable that so many people are reluctant to think about their mortgage when the time comes to switch, but the sad result is that homeowners are collectively losing billions of pounds a year.
“The good news is that things are getting better, if in pockets. We’ve already seen dramatic improvements in the customer experience, helped by the innovative use of technology, which is speeding up and simplifying the application process. Being able to apply and track your application online at any time of day or night is just one innovation, pioneered at Trussle, which is helping to alleviate the stress of uncertainty for borrowers.
“If more of the industry can embrace technological change, we’ll be in a far better position to tackle the inertia costing homeowners so much money.”