There is a ‘computer says no’ attitude among lenders with one admitting to refusing nine out of 10 borrowers on 90% LTV mortgages, says John Charcol.
Ray Boulger, senior technical director at John Charcol, says minor errors on consumers’ credit scores are stopping borrowers from getting mortgages.
He says: “Before the credit crunch, getting money from some mortgage lenders was nearly as easy as asking a resident of the North Pole to lend you some ice.”
Boulger says certain lenders fell over themselves to meet lending targets by offering loss leading rates, but we now find ourselves in completely the opposite place.
Boulger says: “Borrowers are being rejected at record rates, often for very minor indiscretions like being late with a credit card payment, and one major lender admits privately to rejecting 90% of the applications it receives for 90% LTV mortgages.
“The computer says no has become the most common utterance from some lenders. For borrowers it is difficult to know where to turn.”
He says those who rely on best buy tables frequently find that they don’t qualify and most high street lenders (Halifax is an exception) try to inhibit shopping around by leaving a hard footprint even when a customer just asks for a Decision in Principle rather than making a full mortgage application.
He says: “This blatantly contravenes FSA rules, with only a few footprints needed to crucify a credit score.”
But he does say that knowledge of the entire mortgage market is not only an enviable weapon, but absolutely critical to secure a competitive mortgage, and sometimes to secure any mortgage at all.
He says: “In this environment a good, independent mortgage broker is worth their weight in gold.
“The mortgage market has changed radically and is unlikely to ever return to what we knew before the summer of 2007, but it is not as dire as some think. Borrowers just need to know who to talk to for the right advice.”