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Gambling, steak and milk deliveries: The crazy questions lenders are asking borrowers

Brokers have revealed some of the oddest questions they have come across when processing applications ahead of the mortgage market review’s formal introduction today. The regulator’s focus is establishing affordability, but in the intense scrutiny of applicants’ spending some curious questions have popped up.

Here we outline some of the stranger questions lenders are asking borrowers?

  • How often do you have friends over for dinner? Do you have steak?
  • What is your monthly expenditure on pet food?
  • How much do you spend on alcohol per month? Does this increase in particular months?
  • What is your average monthly expenditure on dry cleaning?
  • On average, how much do you spend per month on nappies and other child-related perishables?
  • When you move home, are you going to continue paying £21 per month for your milk delivery?
  • Do you consider yourself to be a regular gambler? If so, how much would gamble on average per month?

Your Mortgage Decisions director Dominik Lipnicki says: “We all want to protect borrowers and clients but this seems to be stretching it a bit. Where does it stop? Are lenders going to ask how much food costs go up at Christmas because the family’s coming round?”

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Comments

There are 9 comments at the moment, we would love to hear your opinion too.

  1. One more story with headlines like this an I’m no longer going to be MM subscriber.

    This is complete nonsense. Get a grip of yourself Dominik, your responsibilities and your business. This story is only fit to hold my chips.

  2. Richard Philbin 26th April 2014 at 10:07 am

    At the end of the day, the lender owns the property until the final payment. They are taking a long term risk on the client and want the client to be fully aware of the risks and the commitment. If they had done this historically then maybe we wouldn’t be in the state we are in. What’s wrong with asking such questions?

  3. Simon Wilkinson 26th April 2014 at 11:28 am

    And after all these questions it is still a computer based decision in the majority of cases!

  4. John Reynolds is right.

    However in principle the MMR does seek to be rather more intrusive in its questioning. I have always thought that the Regulator should have reverted to the MCCB rules which seemed to do a pretty good job – provided they were properly enforced.

    However I regard this as ‘stable door’ in the extreme. The Regulator is crapping itself in case we have a repeat of 2008/9 if (when) interest rates rise again. But one reads that first time house buying is at a 7 year high, thanks to Government help. First time buyers are likely to be the least affluent and in their case not only will the owe to one lender – but in effect to two. So perhaps they are Limbo Dancing under the rules to massage Government egos?

    It seems so odd that on the one hand searching questions are asked of someone seeking to borrow from the private sector (excluding RBS & Lloyds). They are contracted to repay the loan. Yet this same person could potentially receive benefits from the Government with far fewer questions asked, the money is from the Public Purse, with no liability to repay.

    There is absolutely nothing wrong in ensuring that if someone borrows they can repay, but one would have thought that private enterprise should be more than capable of managing its own risks. The fault in the past lay in the fact that lenders worked on the premise that they were too big to fail. The rules on prudence should be more centred on the lenders – Yet without the need to micro manage.

  5. Money Guidance CIC 28th April 2014 at 10:36 am

    Stop smiling, Mr Orwell.

  6. The comments above seem to have taken this article in the wrong light. A lender asking if someone has steak with friends is hilarious as well as insulting to the borrower.

    Checking affordability is one thing but some of the questions lenders ask are actually quite offensive to borrowers… if someone is struggling to pay their mortgage do they really think they are going to keep paying £21 a month on milk deliveries. Commitments are completely different to lifestyle choices and I cant see how they can be seriously quantified as people only make those spends with disposable cash once their commitments have been paid.

  7. colin hodgkinson 28th April 2014 at 3:01 pm

    Well said Tom,

    More importantly or at least as important is the lecture is coming from the Lenders who sold on dodgy books to Fund managers and racketeers who did not balance the risk profiles of each portfolio, It had very little to do with arrears or default as proven by the reposession rates that did not rocket.
    It was the lenders who cannot borrow responsibly.

  8. Colin – spot on.

  9. The problem with this approach is that lenders can (and probably will) use the answers to these questions against the borrowers if things go wrong.

    The cynic in me is just waiting for the day a borrower falls foul because their shopping receipt is for Waitrose when they said they shop at Aldi in their application.

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