The research from prime property mortgage provider, Butterfield Mortgages Limited, revealed that High net worth individuals are struggling when it comes to successfully applying for a mortgage with one in five turned down for a mortgage in the past decade. When compared to the results of a similar survey commissioned by BML in Q1 2019, this represents an increase of 6%.
The independent survey of 2,008 UK adults, including those with a combined investment portfolio of over £100,000, found that of the HNWIs who have successfully or unsuccessfully applied for a mortgage in the last 10 years, 51% have been rejected at some point.
Looking at the reasons for these rejections, 63% of HNWIs said they have struggled to get a loan in the past decade due to their complicated income structures or lack of monthly paycheques. This compares to the national average of 42%. When assessing mortgage applications, 78% of HNWIs believe banks rely too heavily on rigid “tick box” methods.
35% of UK adults who have applied for a mortgage in the past ten years said they have had to wait three months or longer to hear if their applications were successful. This figure jumps to almost three in five (58%) for those with investments worth over £100,000.
Their experiences are not just limited to mortgages. When it comes to other forms of credit, 17% of HNWIs have been turned down for an overdraft since 2011. The same number (17%) have also been rejected for a credit card in that period.
As a consequence, 62% of HNWIs have lost confidence in high street banks’ ability to cater to the needs of property investors and buy-to-let landlords.
Alpa Bhakta, (pictured) CEO 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.
“As a general rule of thumb, the wealthier individuals are, the more complex their finances are likely to be. COVID-19 has only exacerbated the challenges of applying for a mortgage, meaning that many mainstream providers and big banks are simply not equipped to take on complex cases at the moment.
“Rather than engaging with financial service firms who rely on rigid application processes, I expect more HNWIs to seek out brokers and lenders who specialise in dealing with the needs of wealthy and ultra-wealthy individuals. Doing so will reduce the chances of dealing with a lender who is not equipped to manage their unique circumstances.”
