It revealed 50% of homebuyers had been denied a mortgage in 2020 despite being offered one in principle because of changes to lending implemented due to the pandemic.
Meanwhile, a third of homebuyers surveyed said they lost their deposit because of delays in getting in a mortgage.
The survey of more than 1,300 adults who are currently homeowners or are in the process of buying a property also discovered 52% were stuck in chain because of challenges faced in completing their transaction due to lockdown.
Alpa Bhakta, CEO of Butterfields Mortgages Limited, said: “The coronavirus pandemic took the property market by surprise. The fact that many mortgage lenders withdrew products or stopped accepting applications during the lockdown has clearly had a damaging effect on property transactions.
“Indeed, today’s research shows that some buyers have lost their deposit, while others have missed out on properties having been denied mortgages despite receiving an agreement in principle.”
Buyers and sellers ‘hesitant’
Butterfields Mortgage’s research also revealed how the pandemic had made many buyers and sellers hesitant when completing transactions.
Two fifths of prospective buyers had pulled out of buying a property, the study found, after having put in an offer. Meanwhile, 13% of homeowners had decided against selling their property even though they had received offers.
Mortgage payment holidays
Of those surveyed, 16% of homeowners have taken advantage of the UK government’s mortgage payment holiday scheme – in line with UK Finance’s report of one in six borrowers being granted a deferral.
However, it also discovered an additional 14% wanted to use the scheme but had difficulty applying for it through their mortgage provider.
Bhakta was optimistic about the market going forward. “Positively,” he said, “there are mortgage lenders who are continuing to issue loans and support homebuyers.
“What’s more, as lockdown measures are eased we are seeing activity return to the UK property market—as a result, demand that has been pent up over recent months might be released, resulting in a flurry of transactions in the second half of 2020.”
