As Banks Refuse Mortgages Due To Flood Fears, Experts On Why Even More Applicants Will Be Left With Sinking Feeling
Banks are set to leave rising numbers of mortgage applicants with that sinking feeling – by refusing loans on the basis of flood fears.
That’s the view of a property expert whose warning comes as surging numbers of homeowners living on low-lying ground are being told their properties are flood risks.
It means many are learning they will no longer be eligible for new mortgage deals, even though some have never been flooded.
Reports last week revealed how the advice charity National Flood Forum has been received calls from households to say they cannot get a new mortgage deal at the end of their fixed-rate terms, having previously had no problem.
Property expert Jonathan Rolande, the founder of House Buy Fast, and a spokesman for the National Association of Property Buyers, said he wasn’t surprised and expected the issue to become more acute in the future.
He said: “September saw average rainfall in many areas to be three times the average. Our homes were not designed for regular rainfall like this but it is becoming more common. Our flood defences and wastewater systems will also struggle to cope.
“It doesn’t surprise me that banks are examining flood risk data more closely and, in some cases, refusing to lend. Mortgages are a decades-long commitment, and the recent almost tropical volumes of rain are predicted to become more regular. The issue is more acute as banks expect insurance to become more expensive or impossible to obtain for homes that may be at risk.
“It does seem unfair that properties that have never been flooded are now suspect. After all, who in an island nation can say their home is more than half a mile from water? The sea, inland waterways, lakes and underground streams are close to millions of homes that are potentially now at risk. Potentially unmortgageable.
“Bank lending decisions are notoriously opaque and difficult to reverse.
Sellers must confirm if the property has been flooded in the past when answering their sale enquiries, but of course, the fact that it has not happened in the past does not mean it won’t happen in the future.”
Offering advice on how to best navigate the issue, he continued:
“Buyers can look at flood likelihood on the Government website.
“Buyers in areas where risk is higher may wish to avoid homes with basements and can look on higher ground within their chosen locations – the compass app on an iPhone will give you the elevation. It can be found in the Map apps on other devices.
“Before you commit, run the property through a portal to get an insurance quote – a high premium or loaded excesses for flooding might be a bad sign.”