Lenders are discouraging customers from shopping around for the best deal by leaving harming footprints on a borrower’s credit record when they make a simple mortgage enquiry, according to John Charcol senior technical manager Ray Boulger.
Boulger says this approach flouts FSA rules because of the damage this approach can have on a person’s credit rating.
Boulger says: “Most high street lenders (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 rather than making a full mortgage application. This blatantly contravenes FSA rules, with only a few footprints needed to crucify a credit score.”
Boulger stresses mortgage brokers are a vital resource for customers in the current climate.
He says: “This is a time when, more than ever, a 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. In this environment a good, independent mortgage broker is worth their weight in gold.”
Boulger suggests turning to some of the less obvious lenders in the market – small building societies and private banks etc – which use manual underwriters, therefore avoiding the harmful computer model mainstream lenders use which is responsible for the unnecessary, harmful footprints on a customers credit history.
He says: “Despite six lenders dominating the market, niche building societies, alternative lenders and private banks – which are not just a home for the wealthy – 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.”