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Computer says no approach spurns home buyers

Computer says no approach spurns home buyers

Category: Mortgages

Updated: 02/09/2010
First Published: 02/09/2010

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Wannabe home buyers are being denied the opportunity to secure a foothold on the property ladder by overzealous credit scoring systems.

New research suggests that the UK housing market is being held back unnecessarily because of an over reliance on computer systems to assesses the suitability of home buyers.

Figures from Aldermore show that 88% of mortgage brokers are regularly seeing clients turned down for mortgages by automated systems used by banks and building societies.

Three fifths of brokers said that up to 20% of their clients had fallen victim to credit scoring systems, scuppering their chances of buying a property, according to Aldermore.

"Many people will be shocked by these figures, which reveal the extent to which lenders, most of whom let skilled staff go during the recession, are now overly-reliant on technology to make important lending decisions," said Colin Snowdon, chief executive of Aldermore's specialist mortgage lending business.

"They now have no other way of sorting the wheat from the chaff.

"The evidence we see at Aldermore suggests that banks and building societies have significantly heightened the bar which borrowers now have to clear in order to qualify for a mortgage, meaning that perfectly creditworthy borrowers are being told 'no' on a regular basis."

Potential buyers can be turned down for a number of reasons, some of which have little connection to how suitable they are for buying a home.

Credit worthy borrowers could well find themselves failing checks as a result of a recent job change, being self-employed, having income from several sources or living in rented accommodation.

"Lenders should take into consideration all the facts presented to them by an applicant and not use a minor blemish, such as a missed credit card payment several years ago, as a reason for rejecting perfectly creditworthy applicants," added Mr Snowdon.

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