The mortgage network says the self-employed and complex prime mortgage markets are under-served and lenders need to be more flexible in these cases, with underwriters being more effective in determining risk assessment.
Head of mortgage products Martyn Smith says: “Underwriting and risk assessment can take many forms but there has perhaps been an over-reliance and tightening on credit-scoring by large lenders. Our recent launch of a mortgage with no credit-score with the Hanley Economic Building Society showed that there is another way. We are also seeing a more flexible and refreshing approach from some of the new lenders coming to the market.”
“Expert underwriters can conduct more accurate assessments of affordability than any automated process ever can. There is scope for a back-to-basics approach which would facilitate a greater likelihood of more mortgages for self-employed and complex prime borrowers to become available.”
Borrowers are being downgraded due to minor ‘blips’ in their credit history, according to the network, and it says underwriters would put this into context.
But L&G admits that using underwriters is costly and may not suit mainstream, high-volume lending.
Smith adds: “The difference between credit scoring and underwriters is a bit like comparing an off-the-peg versus a bespoke suit.”
Aldermore, which launched last month, last month told Money Marketing that it would not use credit scoring to assess mortgage affordability in its borrowers.