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Mortgage borrowers told 'computer says no'
13 August 2010
Borrowers are being rejected at record rates, often for very minor indiscretions like being late with a credit card payment, said an industry expert. One major lender admitted privately to rejecting 90 per cent of the applications it received for 90 per cent loan to value mortgages, according to Ray Boulger, senior technical manager at John Charcol. Mr Boulger claimed that lenders are blaming the lack of lending on the computer simply declining the application. He emphasised the mortgage market has changed radically and was unlikely to ever return to the summer of 2007. He said: "For borrowers it is difficult to know where to turn. Those who rely on best buy tables frequently find that they don't qualify and most high street lenders, although Halifax is an honourable exception, try to inhibit shopping around by leaving a hard footprint even when a customer just asks for a decision in principle (Dip) rather than making a full mortgage application. "This blatantly contravenes Financial Services Authority (FSA) rules, with only a few footprints needed to crucify a credit score." Mr Boulger said the starting point for borrowers in finding their best buy mortgage is to find which lenders are prepared to lend the amount required, given the borrower's specific profile. He said: "Despite six lenders dominating the market, niche building societies, alternative lenders and private banks are also active and this type of lender offers the added benefit of mostly using manual common sense underwriting by a human being. "This allows cases to be judged on their merit, not on a generic computer model that is often unhelpful to borrowers, to say the least." Published by FTAdviser
