Few could have foreseen the bounce-back in demand from consumers that followed the UK’s first national Covid-19 lockdown.

Record levels of activity have placed immense pressure on the mortgage market and lenders.

They now face the challenge of converting thousands of applications into completions at a time when many are continuing to adjust to the practical implications of the pandemic and as borrowers rush to buy to beat the dual deadline on 31 March of the end of the stamp duty holiday and the withdrawal of the first version of Help to Buy. This pressure on lenders has inevitably impacted service levels and caused delays in the mortgage journey.

In a bid to understand exactly how lenders have been affected, we recently undertook a survey of our members. From the impact of homeworking to a greater reliance on manual underwriting and even sheer demand, the difficulties facing lenders are varied.

Lenders, building societies and banks have all been impacted in different ways, meaning a one-size-fits-all solution is unlikely. However, what our members did flag en masse was the crucial role that intermediaries play in helping them to address the capacity challenge.

Unprecedented activity in a Covid-affected mortgage market means that the industry must work as one to function efficiently and deliver positive outcomes. Intermediaries have already done an excellent job of working with lenders and many of our members appreciate the efforts of those who have gone the extra mile.

But now more than ever, co-operation between lenders and intermediaries is critical, particularly as a second lockdown and another potential wave of payment deferral enquiries threaten to place new demands on lenders. With this in mind, our members identified a number of actions that they could take to help the mortgage market manage this current deluge of activity.

Tracking criteria                                                                            

The impact of the pandemic and subsequent high levels of demand have forced lenders to make thousands of lending criteria changes in order to protect service levels and/or limit exposure. Keeping up with these changes, updates and product changes has been difficult, but doing so is more important than ever.

Throughout our survey, Imla’s members praised intermediaries who submitted applications only for clients who met their full criteria. They encouraged intermediaries to work with their business development teams to ask questions and clarify issues before submitting cases. Members emphasised that this helps provide intermediaries with a quick, upfront decision.

At the same time, our members encouraged intermediaries to use criteria sourcing systems as well as their own affordability calculators. They recognised that the onus was on them to keep relevant information up to date.

Collaboration on packaging

Members also said that the economic implications of the Covid-19 crisis have forced many of them to take a more in-depth look at borrower applications, underwriting many more cases individually in order to ensure that borrowers can afford their mortgage. As a result, many lenders are asking for more information about applicants’ income and the impact which Covid may have had on their financial circumstances. This places additional – and in some cases new – requirements on intermediaries in order to package cases correctly. But where they can, precious time can be saved.

Where cases are packaged in line with lender requirements, applications can proceed more quickly – as confirmed by more than two-thirds (67 per cent) of members surveyed. A fifth (17 per cent) of members suggested that cases which are presented ‘right first time’ can help to reduce time to offer by as much as 10 working days.

But while good packaging remains central to streamlining mortgage applications, lenders also recognise they have a responsibility to make the information they require as clear as possible – especially when it comes to proof of income. This will help brokers understand exactly what documents they need to include in an application, and just as importantly, what they can leave out.

Case tracking

Finally, our members also recognised intermediaries who made effective use of case tracking tools to keep up to date on customer applications rather than chasing lenders for frequent updates.

It’s inevitable that intermediaries and their clients will be anxious to know how their mortgage applications are progressing but, in some instances, members commented that they are spending too much resource on answering case update enquiries.

There are an increasing number of case tracking tools which intermediaries can use to monitor the progress of clients’ applications – and it’s up to lenders to make sure that these are updated frequently enough to give intermediaries confidence to rely on them.

More than four in ten of our members (43 per cent) encouraged advisers to use these tools for application updates, so that they could instead focus their efforts on underwriting and assessing customer cases.

The capacity conundrum affects all areas of the mortgage market – and the key message seems to be to go back to basics and concentrate on what needs to be done in order to make decisions as quickly and efficiently as possible.

Lenders need to be really transparent about what they need – and intermediaries need to respond by putting together cases that are as complete as possible. Co-operation between lenders and advisers has always defined the success in the intermediary mortgage market; combined with good communication it will matter more than ever as the market works to continue operating through and beyond the current crisis.

Kate Davies, Executive Director, Imla