HSBC rejected mortgage due to subjective reason but lending criteria passed

[bloodymortgage]

As the title says, my broker tells me I passed all tests during underwriting , including affordability which was tested first (5 weeks ago). However, at the very end the underwriter has "subjectively" rejected it citing future potential interest rate increases.

My broker tells me that I already passed the usual stress test so it's more than that and there is no good reason why I've been rejected. Even the HSBC business relationship manager is stumped and told my broker that he must have read the decision wrong! That manager has tried for 3 days to get an explanation from the underwriter but she is ignoring all internal emails on the matter.

I've now had to apply with NatWest and have that application escalated as well down the legal line now with completion in less than 6 weeks. Of course now I'm stressing that that application will fail too! (And the arsehole estate agent is now aware due to the second valuer and isn't best pleased to say the least!!).

Mortgage requested was £215k (LTV 73%). My salary is c£90k and I get annual bonus of £7.5k. No credit card debt but monthly loan repayments of £1240. Application in my name as my DH is self employed with variable income and his SA302s show nil due to carried forward tax losses.

What a bloody nightmare!

Anyone had similar happen?

😣😩😣

You mention the monthly loan payments, but how much do you owe altogether over what type of period? If you had to pay for childcare would you still pass a stress test (contingency in case informal care broke down)?

Does it make sense to exclude your DH from the application as you mention him paying you sizeable sums. If his company can afford this, it would seem slightly odd to leave him out, but I’m sure you must have a reason.

Do you both bank with HSBC so they can look at your financial behaviour over time?

When we remortgaged with an HSBC bank (First Direct) it was a 20 minute call.

Why are there no childcare costs? Has that been documented? HSBC are awful in my experience, also turned me down, they are ridiculously strict, you should be fine with NatWest

I wouldn't bet on NatWest being any better....I was going through a remortgage for divorce and passed all the affordability tests - 3 separate meetings to go through everything and then got turned down at the last minute. And that's with a much lower mortgage and 50% equity

Just read this, HSBC pulls all new mortgage deals after floods of demand.

Being cautious in case of market downturn -> puts pressure on market -> get more cautious -> etc

https://www.independent.co.uk/money/hsbc-mortgages-rates-rise-inflation-b2354114.html

It's the maternity leave. I've bought a house whilst on mat leave and remortgaged on mat leave. Both times were offered only a select few rubbish rates. My broker handpicked the ones that I was most likely to get approved for. First was Halifax (2017)and then barcleys (2019)or maybe vice versa. Or rates were rubbish to what was available at the time. We had to jump a lot of hoops to get it approved and took a longggg time. That's with dh being employed

Looks like the second mortgage underwriter may have been told to find a reason due to pending HSBC decision to pull products. Think this is the smoking gun OP

This seems the only other plausible reason other than an error having been made. Thanks for pointing this out.

Cross posts, sadly this does seem likely to be the reason. Fingers crossed for Nat West for you. I remember how stressful it all was at that wasn't with today economic climate.

@Sleepwhatsthazzz Thank you - 🤞

I think maybe the last 3 months with no pay doesn’t help tbh

So I watched a couple of Moving With Charlie videos today, one from yesterday. Apparently 4 or 5 major lenders have put rates up by 0.85% in the last few days.

Could it be a case of 'we know we can lend to others at a fat higher rate, so bugger off' scenario?

Reading through every single comment on this thread is very frustrating. People's mortgages should not be treated like some freemasons backhand shit where only those in the club get the best gig going. There should be far more transparency when underwriters decline.

@KievLoverTwo It could well be indeed. It's very frustrating. I KNOW it was stress tested twice which isn't correct but I highly doubt that it will be rectified given the non response of the underwriter to the internal case manager. I think I need to let it go now as it's done and hope with all hope that the NatWest application goes through, given the this weeks rate increases.

I will post an update once I hear from NatWest. I appreciate the helpful comments and recommendations from all on this thread.

Yes, please do. I am very keen to hear how this turns out.

With difficulty!! Once we'd identified what the problem was we contacted the two banks and explained the issue and what we needed from them. Fortunately they were relatively happy to give us a statement detailing how their statements were produced with cut off times for transfers etc. We were also lucky that we were not in a chain (FTB buying a probate house) so the extra month or so was fine for both sides aside from not being able to give notice on our rental.

I'm glad this isn't what is holding you up OP, although you still need answers.

Read an article this morning that HSBC pulled all new residential and BTL mortgages with just 4hrs notice. I hope the broker can source another lender. Good luck OP.

Watching with interest.

We have a HSBC residential mortgage offer which expires in September for a house move. However, after losing buyer number 1, we got a let-to-buy approved on current house so that we can keep it. We have another buyer but planning on using the LTB as a fallback option.

Unfortunately we'd have to cancel our HSBC offer and reapply through a broker because HSBC Direct won't use rental income as income, but they will via an intermediary.

But I really don't want to get to this point in case HSBC decline and then I'm stuck with no residential mortgage at all! This thread has made me realise this is a very real possibility.

We're desperate to go with HSBC as we currently have £200k mortgage left on a silly low rate and they're allowing us to port and get a second mtg to make up the total.

@EggbertHeartsTina that point re hsbc using rental income through a broker submission but not direct is another indication of just how inconsistent they are!

of course a lender has the right to make its own decisions on who to advance funds to but to be so blatantly inconsistent and then even refuse to engage with the broker for feedback just shows how they think they are the big boy and can do what the hell they like

As PP said it’s not just you OP.

https://www.bbc.co.uk/news/business-65850366

@EggbertHeartsTina I hope things work out for you 😊

Whilst I still think there could be a connection between the news of HsBc pulling mortgages, I understand that this only affects new applications from yesterday evening to Monday morning. Supposedly, full applications that had already been submitted were protected, which leads me back to the error reason. Oh well!

HSBC withdraws mortgage deals for new borrowers https://www.bbc.co.uk/news/business-65850366

Only in this case, the OP said her husband was not on the application because of zero income etc. Generally speaking self employed applicants are not classed as dependents- often they are the primary earner!

The HSBC situation yesterday was awful and extremely stressful but wouldn't have a bearing on a case that had already gone through underwriting. Been working in the industry 20 years and i would hang my hat on it not being one particular thing but the combination of sole income two dependents/high loan payments/mat leave giving the underwriter the wobbles on this occasion. Everything crossed for smooth sailing with Natwest OP

@Outnumbered99 ah, thank you very much. I missed that rather crucial point!

@Outnumbered99 My DH doesn't have zero income. His accounts show profits but for tax purposes (i.e. historical carried forward tax losses), his SA302s are nil. He's never actually made a loss. The purchase of expensive plant on finance created the historical tax losses.

I've been assured by my broker that he has not been deemed to be a dependent. Had we have applied jointly, given his SA302 shows zero, he would have been a dependent which would have put us in a worse position i.e same "deemed" income but dependent on that income. That is the reason he was left off the application specifically.

Agree re yesterdays news having no bearing.

I also am of the understanding that mat leave is a protected characteristic and so can't affect the application.

Re loan repayments (which end during the period of the 5 year fixed term), with my income I already passed stress tested affordability with wiggle room of circa £30k.