Credit crunch ‘spooking underwriters'

A Mortgage Introducer source suggested that the increased risks in the marketplace meant that underwriters were ignoring common sense.

He said: “It is the job of the underwriter to approve or dismiss an application given to lenders, but over recent months I have seen a lot of applications being turned down – for no good reason.

“I think underwriters are too scared to do their job at the moment and are rejecting cases that should go through. If borrowers had a blip, such as missing a credit card repayment because they were on holiday, this used to understood and did not affect the underwriting decision. But now underwriters are turning these down. ”

However, the idea that underwriters were ignoring common sense when making decisions into mortgage approvals was refuted by Gus Park, director of intermediary sales at Mortgage Express, who instead suggested that lenders were being more prudent and were forced to reassess their policies because of the market uncertainty.

He explained: “I can’t speak for other lenders obviously, but it is possible that some lenders are showing less flexibility in the current environment and as there are less competitive lenders out there then there are likely to be more deals that are completed as a result of discretion.

“The lack of common sense might instead be a completely valid lending policy.”

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