Mortgage "famine" for high net worth borrowers

Borrowers looking for mortgages in the £1m plus bracket are finding lean pickings from lenders, according to wealth manager HFM Columbus.

The situation has become so serious that the top end mortgage market is in danger of seizing up altogether.

Gary Festa, HFM Columbus mortgage specialist, said: “If you have a 35-50% or so deposit to put down then yes, you may be able to find a private bank willing to risk its money – but the reality is that most borrowers in this high end bracket are City workers still to a large extent reliant on their annual bonus, which they have traditionally used as a deposit for their mortgage.”

But banks, he said, are shunning the bonus scenario, and are simply not taking them into account when calculating affordability.

Festa added: “We have had clients whose basic salary has not changed for 10 years. They have received bonuses every year - including 2009 - but some banks are still saying that they will only lend on the basic salary, which is bizarre in my view.

“We have seen many examples in recent weeks where clients have the opportunity to snap up properties, both commercial and residential, at bargain prices.

“But for the most part the deals have been not gone through to completion because lenders are not prepared to provide the finance without onerous or ridiculous conditions. “Only a couple of years ago all the banks were fighting to win the high net worth clients’ mortgage business and that time will return again, possibly in the not too distant future.”