Mortgage lenders say that a deterioration in the quality of applications is causing bottlenecks and making it harder for them to maintain good service levels.

Speaking at a recent St James’s Place video conference, Intermediary Mortgage Lenders Association chair and Vida Homeloans managing director of mortgages Louisa Sedgwick and Aldermore group managing director of retail finance Damian Thompson both reported a notable decline in the quality of applications submitted.

They said in many cases forms have been left incomplete and documents have been missing as brokers have been rushing to secure rates for their clients before they are withdrawn.

Sedgwick said: “We are seeing a lot of duplication of DIPs and applications, I think because we’ve got to the point where lenders are pulling rates really quickly. 

“What’s happening is a number of intermediaries are going out and securing rates with various different lenders, with a view to thinking ‘well if I don’t get my first choice, at least I’m gonna get my second, third or fourth’.

“Some are going through to applications, especially if there’s a fee free option available to the customer.  

“The challenge that you face is then managing your capacity, because I could think that I’ve got 100 cases that are due in tomorrow because of all of the DIPs and the applications, but actually it might only be 30 or 40.

“So you adapt your resource to suit the amount of cases that you think you might be getting in. 

“What I would say, and I know it’s a difficult one, is that I think we need to get out of a cycle of multiple applications because actually it is driving the wrong practices within the lenders. 

“As a lender have also seen a distinct drop in the quality of application submissions and that’s probably due to the fact that brokers are chasing rates so you get either a half an application or an application with no documents supporting it or no fees paid. 

“That creates a bottleneck somewhere within the process. 

“What we’ve also seen is that a property is being chased by a number of different applicants and again it’s creating a bottleneck.

“It’s probably a case of asking more questions, getting more upfront documentation wherever possible as part of your, ‘know your customer’ obligations.”

But Sedgwick added that lenders need to get much better at communication with brokers and providing realistic processing timelines.

Aldermore group managing director of retail finance Damian Thompson agreed and said he had been seeing similar issues.

He said: “We are seeing multiple applications we are seeing DIPs coming through without the details that are required and we are seeing two customers chasing the same product thinking that whoever gets the offer will get the property and they are then being gazumped by a third person.

“So not only are you predicting what scarce liquidity you have for where you think your completions are going to be, you can find this is out of kilter, and you are in this place of constantly moving around.”