Mortgage lenders have adopted a new mantra of “Creditworthiness and affordability”. The result is a heavier reliance on credit scoring as a primary assessment tool which is entirely in keeping with these risk-averse times but we wonder whether it goes a litte deeper. We are seeing a return to quite heavy lender volume and rather than increasing capacity it would appear that lenders are using a higher criteria for borrowers as way to manage this uplift of business – result is that they control their cost base whilst also picking what they consider as the cream of the crop. This will lead to borrowers who are perfectly creditworthy struggling to get credit, simply because they have not amassed enough points. However, as we know the layer of cream can be quite thin so it will be interesting to see how the rules are relaxed as the competitive juices begin to flow.
The other half of the story is affordability and this is now at the top of every brokers list of priorities. Most lenders have abandoned simple income multiples, which were blunt tools in any case, in favour of more sophisticated affordability models. Brokers now have direct access to the lenders’ affordability calculators, which means that we can give an accurate indication of potential loan size as well as being able to compare across various lenders.
All in all the need for a mortgage healthcheck has probably never been greater so give us a call and we will happily guide you through the maze.