Jeremy Wood, chief executive of Dudley Building Society claims the big lenders have ‘lost their nerve’ when it comes to underwriting and are relying too heavily on computer-generated lending decisions.

He said:

“The overhasty withdrawal of interest-only, the restriction on older borrowers and the tick box mentality being seen on cases that do not meet every part of the lender’s matrix are symptomatic of a part of the industry, which has lost its nerve.”

Potential borrowers are being left out, he added:

“We are not talking about bad credit risks, we are talking about good quality cases, on which a good underwriter can make logical and positive value judgements.”

Springtide Capital managing director Henry Knight, who has previously highlighted the difficulties of finding expat mortgages, said building societies were filling in the gap on manual underwriting.

He said:

“The high street banks have some incredibly good underwriters within their teams but they are often lacking the authorization to agree a deal if the computer says no.”

But Your Mortgage Decisions director Martin Wade said lenders’ policy was responsible:

“The policy isn’t as a result of automation, it is simply lenders picking and choosing as the market recovers. They are able to fufill their need from a higher quality applicant.”