Fawlty algorithm?


There must be something seriously flawed with the banks’ home loans risk algorithm. I recently encountered a situation where a self employed business person tried to apply for a bond on a new property. They have an excellent credit record and have run a successful (and very profitable) business for almost 20 years…but because they are self-employed they have found it very difficult to get bond finance for the house from all of the banks (a bond originator was used).

The irony (and fault in the system) is that their PA, who is employed by them, can get a bond more easily because she is a “salaried employee”. How flawed is this?

So what is it with the home loans divisions of the banks – how can you justify this crazy system? Or is it just a tick-box exercise that no one has applied their minds to for far too long?

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