Cover
a new dawn of yes
It’s the bane of brokers’ and borrowers’ lives, the moment a lender says no and doesn’t say why. But an alternative is emerging. Sarah Davidson examines who’s saying yes to borrowers
Ever feel like punching your computer? You’re not alone. “Computer says no” syndrome is
maddening, especially when any sensible person can see it’s a ridiculous and illogical response to a perfectly good borrower. But say no the computer does. A massive 92% of mortgage lending in
2010 was done by the largest six lenders in the UK – Lloyds Banking Group, Royal Bank of Scotland, Nationwide, Barclays, Santander and HSBC. That is despite Trigold listing 78 different lender brands in the market.
The big six are all highly dependent on
automated credit scoring to judge whether to accept a borrower or decline them. It’s a reasonable system and they will tell you it’s better than any other form of underwriting at predicting future default probabilities. That’s as may be. But while there
continues to be limited funding, frozen wholesale mortgage markets and a severely limited appetite to lend, computer credit scoring is also a black box to lose good but nevertheless unwanted customers in.
Demand is high enough and supply
restricted enough that lenders can cherry pick the best unblemished customers from the top of the heap while still hitting their lending targets. The flipside is that everyone else is
turned away. It’s infuriating for brokers and it’s life-altering for borrowers. But the market is beginning to find a home for these people. Lenders around the edges of the market are picking up quality borrowers who have been turned down by the high street. Instead of computer says no, it’s
34 mortgage introducer JULY 2011
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