Nearly a third of property sales that collapsed in the second quarter of this year were hit by lenders tightening their criteria, research shows.
Analysis by fast-buying firm Quick Move Now found that 31% of property sales failed before completion between April and June 2022.
Of the sales that collapsed, 30% failed because buyers were denied funds by mortgage companies.
That suggests growing caution on the part of lenders, Quick Move Now said.
Half of the failed sales were attributed to the buyer changing their mind, backing out in favor of another property or backing out after an unfavorable survey report and the remaining 20% were attributed to prying eyes or changes in buyers’ circumstances, according to the research. .
Danny Luke, Managing Director of Quick Move Now, said: “It is unusual these days for buyers to see an accepted offer on a property without having reached an agreement in principle with their mortgage lender.
“This suggests that the 30% of failed sales attributed to difficulty obtaining a mortgage is due to buyers refusing during the formal mortgage application process after initially obtaining an agreement in principle.
“This indicates that underwriters are increasingly discerning about the level of risk they are willing to accept, both in terms of the circumstances and finances of the buyer, and the properties they are willing to lend. .
“Overall, the scrap rate has remained stable throughout the first half of this year, dropping only one percent between the first and second quarters, but the reasons for the sales failure tell a evolving story on the challenges facing the real estate market today.
“Rising inflation and the cost of living have made it inevitable that lenders and buyers will start to be more cautious.
“We have also seen delays in the transfer of ownership process, which is forcing an increasing number of buyers to ask for extensions on their mortgage offers.
“Those initially offered a mortgage may find that they are unable to secure an extension to their offer, even though their situation has not changed. With the tightening of lending criteria, difficulty in obtaining mortgage financing is an issue that I suspect we will see much more of in the coming months.