GoCardless: UK consumers issue ‘clarion call’ to mortgage lenders

Ellie Duncan,
21 Sep 2023

Lenders are relying on “outdated” methods to assess mortgage affordability, according to 41% of UK consumers surveyed by GoCardless, while 42% called on those same lenders to use technologies, like Open Banking.

The research by GoCardless among 2,014 Britons revealed that first-time buyers and the self-employed are the most disillusioned by the mortgage application process.

More than half, at 53%, of those who intend to purchase their first home in the next 12 months describe the mortgage application process as “extremely stressful”, compared to 40% of the general population.

Meanwhile, 61% of these first-time buyers also believe the mortgage application process “confusing”, versus 43% of all consumers.

GoCardless reported that 18% of consumers believe they have been “unfairly penalised” by mortgage lenders, rising to 31% of those who are self-employed.

Its findings showed that while 41% of British consumers believe lenders are relying on “outdated” methods to assess mortgage affordability, among those who have purchased a property within the past 12 months, this climbs to 48%.

Of those surveyed, 42% believe lenders should embrace technologies, such as Open Banking, to consider more data points when assessing their mortgage application, including everyday spending and rent payments.

GoCardless’ research also found that 26% of consumers would be open to sharing their bank account data via Open Banking to enable lenders to view all of their incomings and outgoings, as opposed to relying on traditional credit checks.

“Consumers have issued a clarion call to lenders everywhere: when it comes to the mortgage application process, we’re due for a change,” Pat Phelan, managing director of UK&I and chief customer officer at GoCardless, said.

“The system that many lenders use today has not changed for years. But the way in which we earn, save and spend, from side hustles to the subscription economy, is completely different.”

Use of Open Banking by lenders would help to reduce the stress and anxiety brought on by the mortgage application process, according to 18% of UK consumers, increasing to 26% among 18 to 34-year-olds.

GoCardless is an event partner for Open Banking Expo UK and Europe, which takes place across 18-19 October at the Business Design Centre in London – get your ticket here.