SELL YOUR HOME QUICKLYMortgage lenders intensify their customer profiling initiatives
Banks and other mortgage lenders are growing their “customer profiling” initiatives in a move to curb high-risk lending, reports The Independent.
According to the latest research by the home loan information website, “mform”, even existing and loyal customers’ credit records are being scrutinised as the so-called “credit crunch” intensifies.
Essentially, the practice of customer profiling involves mortgage lenders predicting a customer’s future repayment behaviour by analysing information such as their income, the value of their home equity, and how regularly they remortgage. According to the paper, customer profiling will have serious implications for the expected 116,000 mortgage borrowers whose home loans are scheduled to expire this year.
"A credit record looks backwards at what has passed, whereas customer profiling is a forecast that makes assumptions about what you might do based on other data collected," explained “mform’s” business development director, Francis Ghiloni, "But the trouble with this approach is that it tends to penalise those already worst off.”
He continued to say: "If you have significant equity, say, are a good credit risk and have a large income, you will be the kind of customer that a lender does not want to lose. They will be lenient with deals offered in order to retain your business. On the other hand, if you are a young borrower with low earnings and little equity, you are less likely to be offered another deal, which means going on to an expensive SVR."
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