There are many moving parts within any property purchase. The underwriting of a mortgage is perhaps one of the less eye-catching, but it’s undoubtedly one of the most important. It can also be one of the more complicated parts of the process, requiring a lot of information – and human skill – to allow a lender to reach a verdict.
According to the National Association of Realtors (NAR), mortgage underwriting typically takes more than a week to complete. However, mortgage brokers recently warned that the pace of underwriting is ‘going backwards rapidly’, and that the process is taking much longer than it should.
Delays in the process can hinder borrowers, with brokers reporting that mortgage rates often rise in the time that it takes for a lender to deliver a decision in principle (DIP). It can be a nightmare for brokers and generally hampers growth and fluidity across the property market.
So, having been part of the Chetwood Bank team that’s developed and launched a new specialist lender in the past year, I thought I’d take a look at what matters most in making the underwriting process as painless as possible for lenders, brokers and borrowers alike.
Exploring the causes of delays in the underwriting process
Let’s start by taking a step back and exploring the root causes of the delays that many intermediaries are coming across.
Over recent years, many lenders – particularly those on the high street – have become noticeably more risk-averse, tightening their lending criteria in response to economic turbulence. This often means brokers and borrowers are required to provide additional documentation or clarification, some of which can take days or even weeks to gather.
At the same time, while large sections of the financial services sector have embraced new technology to streamline processes, many lenders still rely on manual checks when considering applications.
This doesn’t always pose a problem, until there’s a spike in applications. During those busy periods, like the recent rush seen in February and March ahead of the stamp duty threshold deadline, it’s common for some lenders, such as ones who haven’t modernised their systems, to struggle to process the applications in a timely manner.
This is particularly pertinent amidst the current rise in remortgaging; in February, data showed that completed remortgages increased by 11%, with borrowers coming off fixed-rate products and seeking new deals, in turn adding a significant amount of pressure on underwriting teams, compounding any existing bottlenecks.
Creating further frustration among intermediaries is the sense that lenders are not communicating with their clients as well as they could be. It’s natural that busy periods will lead to longer application processing times, but it’s important that brokers and their clients are made aware of any delays – and that their application will be reviewed in due course.
Too often, property buyers – homebuyers and buy to let investors alike – will pay fees to solicitors and surveyors, only to later be told that their mortgage hasn’t been approved after all. Money is lost, chains break, and the market suffers.
Clearly, lenders must do all they can to provide decisions as quickly as possible, allowing buyers and brokers to plan more effectively – but what else can be done to improve or expedite the process?
Addressing the delays in the underwriting process
To be frank, the first thing the industry needs to do is recognise what year it is, and how far technology has come.
The days of relying solely on manual processes are behind us. Investing in automated checks and document verification should no longer be a ‘nice to have’ – it should be an industry standard. While most brokers aren’t demanding a fully digital, end-to-end mortgage journey, there is a clear appetite for smarter tools that streamline communication and speed up applications.
However, automation should never come at the cost of human connection. Speed is vital, but brokers still need access to underwriters and tailored guidance, especially for complex or unusual cases in the buy-to-let space.
Striking the right balance between efficiency and personalised support is therefore key to restoring confidence and reducing friction in the underwriting process. Lenders should ensure their team can always be reached by phone or in person if they’re to better support their clients.
In addition, they can share in-depth resources – either on their website or through external communications – that provide brokers with as much information as possible about their criteria, products, or processes. This can save brokers time by allowing them to quickly determine whether a lender is a suitable fit for a particular case.
The key to this is investing in the right team and training. Earlier this year, I wrote in Financial Reporter about the process of developing the ModaMortgages’ proposition and building our team from the ground up.
I highlighted that, by investing in a diverse workforce and broadening the appeal of the sector among a wider range of people, lenders can produce better outcomes for their brokers and borrowers – particularly in the underwriting process, where problem solving plays such an important role.
Ultimately, there’s not an immediate quick fix when it comes to speeding up the underwriting process. That said, it’s clear that brokers need lenders to commit to evolving with their needs. By embracing technology, investing in skilled and diverse teams, and improving communication and transparency, lenders can remove unnecessary friction from the process.
The market, as always, is moving quickly – those who adapt will lead the way.
