I was particularly struck by the comment that ‘the lack of common sense might instead be a completely valid lending policy.’
The problem many large-scale lenders are beginning to suffer from is a reliance on computer-driven decision models which reduces flexibility, and a lack of investment in skilled and experienced underwriters who, unlike the computer, can look at a case in the round and use common sense where appropriate.
When the market was rolling, this worked by offering a fair service at low cost. However, as lenders review their policy and tighten criteria, cracks are appearing as more cases require human scrutiny.
As the market review of credit policies plays out, we are likely to see a polarisation between those lenders who offer keen pricing but only on the most straight forward risks and specialist lenders who have invested in ‘common sense’.
Yours sincerely
Tim Sturley
Heritable Bank
