A better way to spin this question would be "Why would they not offer you a mortgage on an over-priced development?"
Lets's for a moment look at it from their point of view with regard to both the property and you as a borrower.
I, mortgage company "ABC Mortgages" need to sell product (i.e. mortgages) to make a profit. I've got a Porker on the driveway, a wife, four kids and 3 mistresses to support. Through my research, reading the paper, watching the news and industry sources, I discover that a substantial amount of potential customers for my product are buying in XYZ country in the resort of 'rip-offsville'. Prices in the development look high, so if I sell a mortgage to a purchaser in that complex of say 70% of the purchase cost over 25 years I'll make a nice tidy profit.
The next day I send one of my kids (sorry apprentice Real Estate Valuers) out to get an eyeball on the place. They, like me have never heard of the country before but are happy to go because the developers brochures for the development promise '300 days sunshine every year' and 'Golf course being constructed adjacently'. Ryanair hasn't yet started flying there but the developer says they will 'soon' so I've got to shell out a fortune for a ticket which, after some research, entails only 3 stop-overs instead of 4.
When my valuer (eventually) arrives in the resort she heads straight for the local ex-pats bar where they meet other valuers (with their developers representative 'buddies' in tow). These guys have been here a 3 days longer and have a REALLY indepth knowledge of the market. They are selling apartments across the road from my valuers prospect at what seem like RIDICULOUS prices. "Rip-offsville" prices seem cheap in comparisson. "Rip-offsville" has an extra pool and a beautifully landscaped 'Child recreation area' with swings and slides, surrounded by bark mulch which the developer used to cover the building debris and rubble with which he plugged that pesky open mineshaft.
Prices must be wrong! Add another 70%!!!
Trainee-Valuer arrives back in office Monday morning, bleary eyed, hungover and complaining about the 'bloody locals' in XYZ. Seems she had occasion to meet TWO of them in the SAME day (Sunday morning) when she had to roar at the house maid to get out of her room at 11am and a similarly disconcerting encounter with a dark swarthy chap at the metal detector in the airport, when she was forced to hand over her belly-button ring.
Who cares about her! I'll give her a good report to her lecturers at the local college of HE from whenst she came on work experience.
Now for the good bit!
It transpires that after the second bottle of Jack Daniels, and just before she shagged him, Shelly, my wonderful valuer was able to tell, Boris, the developer that he was WAY under-pricing his development and she could 'schell it fer dubble' what the locals wanted to pay. He immediately handed her the brochure on a diskette in pdf format and declared "ABC Mortgages" sole UK broker for his development.
Cavorting around the room in his boxers with bottle of bourbon in his hand, Boris fails to notice that he has set light to his stick-on hairy chest with his Fidelis Castris cigar (counterfeiting is rife in XYZ) and declares "I vil geev dee foreeners 6% guaranteed rental for evry teneemant, I meen apartement, day buy!" Boris is euphoric! 14 months later he'll be sweating in the solitary cell of the local prison for tax evasion, fraud, bribery of government officials and building without a licence. The building will be just out of the ground and six months behind schedule, with no chance of ever completing since the firm went bust, but for the moment Boris is on Cloud Nine.
10am Wednesday morning. I'm blowing the ink dry on the prospectus for 'Rip-offsville'. It has just come back from the printers with the ABC logo stamped on it alongside theirs. The promotional video, shot using styrofoam models and actors dressed in Bikinis at a tanning salon in Romford (to get the 'sun' using the lamps and all that), arrived an hour ago.
10.05am and you stumble through the door of the mortgage shop, shaking your umbrella and dragging a bedraggled poodle. You clutch the deeds to your house in your hand, in your purse are your government bonds and a statement from your life assurance policy. You've worked hard in your pensionable civil service job for 30 years and are completely debt free. You have a salary of 60k per annum with indexed linked pension, 300k stg equity in your house and you've just heard that Aunt Nellies spinster sister-in-law read a favourable review of XYZ country in the property section of The Grimes broadsheet.
As I gaze into your expectant eyes, set in your fresh and trusting visage, deep down inside me where my 'compassion for fellow man' gland exists I feel..........nothing.