Why high-net-worth individuals are struggling to secure mortgages
It might seem counterintuitive to some, but high-net-worth (HNW) individuals often face difficulties when securing mortgages.
In February 2019, Butterfield Mortgages Limited (BML) commissioned independent research to reveal how commonplace the issue is. The survey, which received responses from more than 500 UK adults with assets worth in excess of £1m, found one in nine had been refused a mortgage in the past decade.
It is, in part at least, a result of the risk-averse approach now adopted by many conventional lenders; something that has become far more common since the onset of the global financial crisis in 2008.
New regulations, such as the Mortgage Market Review in 2014 and the Mortgage Credit Directive in 2016, have resulted in a more stringent, turgid approach to assessing mortgage applications. Consequently, wealthy borrowers – who often do not match some lenders’ tick‐box methods – are among those who now struggle to access credit.
This has resulted in frustration amongst HNW individuals. BML’s aforementioned study found the vast majority (79%) of respondents feel conventional lenders are too rigid in their approach to assessing mortgage applications, failing to properly take an individual’s circumstances into account.