The UK’s wealthy high net-worth individuals (HNW) individuals are struggling to secure credit from high street banks, new research from Butterfield Mortgages has revealed.
Butterfield Mortgages has commissioned an independent survey among more than 500 high net-worth individuals to uncover the difficulties they face when applying for credit. It found:
- A ninth (12%) of the HNWs surveyed have been turned down for a mortgage in the past decade
- 5% have been denied an overdraft and 4% have been refused a credit card
- 79% of HNWs think too many banks apply “tick box” methods when assessing mortgage applications, failing to take into account personal circumstances
- 44% find it inherently difficult to secure a mortgage because their capital is tied up in existing real estate investments
- 38% say they struggle because they do not receive a standard monthly paycheque
- 60% believe it has become increasingly difficult to secure mortgages for non-primary residential purchases
- Two in three (67%) do not believe high street banks cater to the needs of property investors and buy-to-let landlords
- 73% believe brokers play an important role in finding specialist lenders that cater to their needs
The prime property mortgage provider surveyed more than 500 HNWs––all with a net worth over £1 million––about their experiences of securing finance from banks. It found that as many as 12% of the wealthy individuals quizzed have been rejected for mortgages in the past decade.
Butterfield Mortgages’s study revealed that 79% of HNWs find the process of applying for a mortgage with a bank too rigid, saying they apply “tick box” methods that fail to recognise unique personal circumstances.
Complicated financial profiles are one of the main challenges for HNWs when securing credit, with their wealth often invested into property or illiquid assets. Indeed, 44% said they have found it inherently difficult to access credit because their capital is tied up in existing real estate investments, while 38% struggle to get mortgages from banks because they do not have standard monthly paycheques.
Furthermore, 60% believe it is becoming increasingly difficult to secure a mortgage for a non-primary residential purchase. In response, two in three (67%) UK HNWs have lost confidence in high street banks, feeling they do not cater to the needs of property investors and buy-to-let landlords.
To overcome these challenges, the vast majority (73%) of wealthy individuals rely on brokers to help them find the lenders that cater to their needs.
Alpa Bhakta, CEO at Butterfield Mortgages said “It may come as a surprise that of all the demographics, the UK’s wealthiest people often find themselves at an immediate disadvantage when it comes to applying for credit from banks; be it mortgages or credit cards.”
“In reality, the rigid “tick box” methods applied by many conventional lenders are not compatible with HNWs’ unique and often complicated financial profiles. To overcome these challenges HNWs need to seek out brokers or lenders who can commit the necessary time and expertise to understand their situation and, in turn, deliver mortgages that meet their specific needs.”