It is not unreasonable to assume that getting a mortgage would be straightforward for people who are considered wealthy. New research has shown that this is far from the case.
It is common to assume that people who are considered wealthy have every door and opportunity opened to them without any pause for thought. This is not always the case, and you might be surprised to learn that over the past decade, almost 1 in 5 (18%) high net worth individuals have been turned down for a mortgage.
Yes, you did read that correctly, a good number of high net worth individuals (HNWIs) are struggling to get mortgages approved according to new research by Butterfield Mortgages Limited.
Being a person of wealth often means complicated income structures and a lack of monthly paycheques which goes some way to explaining why almost 2/3rd of HNWI’s who’ve applied for a mortgage in the past decade have struggled.
It’s not only obtaining mortgages where the wealthy have struggled. Almost 1 in 5 (17%) of the 2,008 UK adults who took part in the study stated they’d been refused overdrafts since 2011 with the same number rejected when they applied for a credit card during the same period.
The result of this will not make good reading for the high street banks as 62% of HNWIs now say they’ve lost confidence in the banks.
Alpa Bhakta, CEO of Butterfield Mortgages Limited, said: “The credit struggles of the UK’s wealthiest may come as a surprise, but as today’s research shows, their ability to access and arrange financing is by no means guaranteed. This is a long-term challenge, and as a result of their frustrations, high street banks are facing a loss of confidence from high net worth individuals.
“As a general rule of thumb, the wealthier individuals are, the more complex their finances are likely to be. COVID-19 has only exacerbated the challenges of applying for a mortgage, meaning that many mainstream providers and big banks are simply not equipped to take on complex cases at the moment.
“Rather than engaging with financial service firms who rely on rigid application processes, I expect more HNWIs to seek out brokers and lenders who specialise in dealing with the needs of wealthy and ultra-wealthy individuals. Doing so will reduce the chances of dealing with a lender who is not equipped to manage their unique circumstances.”
Main points from the research conducted by Butterfield Mortgages Limited:
- 18% of HNWIs been turned down for a mortgage in the past decade
- 51% of HNWIs who have successfully or unsuccessfully applied for mortgages in the last ten years have been rejected at some point
- 63% of HNWIs who have applied for a mortgage in the last decade have struggled to get a loan due to their complicated income structures, as compared to 42% of UK adults
- 78% of HNWIs believe banks rely too heavily on rigid “tick box” methods when assessing mortgage applications
- 35% of UK adults that have applied for a mortgage in the past ten years said they have had to wait three months or longer to hear if their applications were successful
- 62% of HNWIs have lost confidence in high street banks’ ability to cater to the needs of property investors and buy-to-let landlords
About Butterfield Mortgages Limited
Butterfield Mortgages Limited is part of the Butterfield Group and a subsidiary of The Bank of NT. Butterfield & Son Limited.
About the research
The research was carried out between 15th-20th January 2021 and involved 2,008 UK adults. The survey was carried out by Opinium who is an independent market research agency and members of the Market Research Society (MRS) Company Partner Service, whose code of conduct and quality commitment it strictly adheres to.
Read more finance-related, news, articles and guides in our dedicated section here.