The Bank of England’s (BoE) Credit Conditions Survey found credit scoring had narrowed for the second consecutive quarter with the proportion of declined applications having increased.
However, many brokers said they had not noticed a change in credit scoring and at present their clients were still being accepted by lenders.
Payam Azadi, partner at Niche Advice, said rather than the market making it harder for complex clients to secure loans, it was serving them well and was thriving.
“The impaired credit market is on the right track. There is plenty of choice available to clients who don’t have the strongest credit history so they’re not being left out,” he said.
Mike Hodgkinson, mortgage adviser at Xact Mortgages, shared the same sentiments and added that lenders had always been strict on complex clients and if they have been refused a loan it was because of poor advice from brokers, not strict credit scoring regulations.
Colin Payne, associate director at Chapelgate Private Finance, said lenders have learnt from the mistakes of the credit crunch and now ask questions about the clients they accept.
He said lenders now investigate the reason behind why an applicant fell into financial hardship and then decide whether the application is viable or not. This points to more emphasis on tougher affordability testing than credit scoring.
Dean Mason, practice principal at Masons Financial Planning, said: “Lenders are worried about what impact Brexit will have, so they are being a lot pickier on the other areas of underwriting, in case house prices drop again.”
Despite this, a poll run by Mortgage Solutions revealed 41% of brokers said there had been a change in lenders’ appetites to accept complex clients. A further 33% said the tightened credit scoring impacted only a few of their clients, while 26% said none of their clients had been affected.
One reason for this discrepancy, said Daniel Bailey, mortgage and protection specialist at Middleton Finance, between what brokers are saying and what they are seeing, may be a lack of understanding of how credit scoring works from both clients and brokers.
He said many clients weren’t aware they had a poor credit rating and in most cases didn’t see the importance of checking.
He added that though the role of a broker requires them to keep up-to-date on changes in credit scoring, sometime they may fall behind.
Brokers want the focus to be shifted onto lenders to accept clients with irregular levels of income as many clients who are self-employed or freelance have been turned away.
Azadi said: “Lenders need to develop a better understanding of these types of clients. They need to be considered on par with permanent workers because right now they are still considered high risk.
“As time goes on there will be more people who will be freelance or self-employed looking for a mortgage and lenders need to adapt to this.”