The data also lets us compare how loans originated through different channels in the UK progress through the pipeline. The data shows that 5% of loan applications submitted directly to lenders are completed very quickly – in fewer than 30 days. Among broker firms, the proportion of business completed to the same timescale varies significantly. Some firms have a significantly higher completion rate – although this may, of course, reflect differences in the customer base.
Over a more typical completion timescale of 90 days, differences between broker firms become less pronounced, and tend to be closer to the average of 63% of mortgages that are processed directly by the lender within that period. But even over this timescale, some broker firms had a materially higher completion rate.
Even allowing for factors that could affect mortgage pipeline times - such as complexity or the circumstances of the borrower - the results show that in the year to June 2013 applications for loans by FTBs typically took 81 days to reach completion, while the process of remortgaging took an average of 59 days.
Loans with different risk characteristics show different application-to-completion timelines – as might be expected, there is a longer pipeline for loans with higher LTV ratios, for example. The completion time for a mortgage for a Right to Buy purchase is longer on average than most other applications, although this partly reflects differences in the process. In Scotland, meanwhile, the process is shorter, essentially because of differences in the home-buying process.
In the 12 months to June 2013, regulated mortgage applications took an average of 72 days to complete. But applications for remortgaging were significantly faster – 59 days on average. First-time buyer loans, meanwhile, spent 81 days in the pipeline before completion.
Right to Buy transactions took an average of 121 days to complete, an intuitive result given that these loans go through a transaction process partly shaped by different local authorities. Typically, they also require more paperwork and are more complex to underwrite.
Within the sample, there is also variation between lenders. The average time taken to complete an application by a first-time buyer, for example, ranged between 72 and 87 days.
An interesting result is that in Scotland the mortgage application-to-completion pipeline is shorter. A successful application by a Scottish first-time buyer takes an average of 59 days to complete, compared to 81 in the UK as a whole.
The CML concluded:
"We are also entering a world of greatly expanded regulatory reporting to the FCA. And because the RMS is based on copies of lenders’ regulatory product sales data, we will be able to get more insights from our applications and completions data. We will be able to look in much greater detail at new lending, including the effect of the new affordability rules on different streams of business, and whether new trends emerge in procuration and arrangement fees. We look forward to playing a key role in helping the industry navigate through these uncharted waters with our new, and ever developing, data."
