A Perfectly Safe Deal… Until It Wasn’t: The Truth About Lender Declines

This one pisses me off more than any other answer from a lender I reckon. We had a decline yesterday. What was it? The lender’s comments were, we don’t have a risk appetite for that at the moment.

What does that even mean? I’m not trying to feed you a sandwich that you don’t feel like. This is a person. This is a couple.

These are human beings. These are nice people. And you’re saying you haven’t got an appetite for it? Pisses me off.

Anyway, what it probably means, I’ve talked to the relationship manager and this was a clean deal. This is a couple with really good income, good loan size, 1.4 mil and only a 50% loan to value ratio. So a very safe deal.

Why do some lenders reject great deals?

So why? After talking to the relationship manager, we find out that she missed the credit card payment last month, February. And we’re talking about a $3,800 credit card. So we’re talking about minimum repayment of what, $50? And they’ve had a mortgage for $2.3 million up until recently that they never missed the payment on.

But this credit card has got them unstuck and the credit file is not even that bad. Like the credit score is still 800, which is a good score, which is fine. So what does that mean? This is not within our risk appetite.

It’s such a rubbish answer. I’ll tell you why. Because there’s something internally, some internal metrics that they use that scores the deal as unfavourable and they don’t want to say what that is.

They don’t want to disclose what their internal scoring system is, of course. But also, it just means that we can say no without telling you why we’re saying no. We’re just saying, oh, it doesn’t fit us.

We don’t have an appetite for that. But it’s so unreasonable. So this is a good deal.

So it’s not the end of the story. We’ll go to another lender. There are other options.

But man, that answer just gets under my skin.