Following a LinkedIn post by broker, Joe Childes, of Rotherham-based Right Choice Mortgages, saying a client was declined by a lender due to gambling transactions seen on their bank statements, despite it being a joint application, the borrowers having no form of credit in the background and the loan being less than 50% loan-to-value, Newspage asked brokers if this is an anomaly or whether lenders are red flagging gambling of any kind.
One said “Borrowers with more than enough spare income, no background financial issues, and who use gambling as a leisure activity shouldn’t be treated like they’re the Cincinnati Kid”, while another added: “I’ve seen bank statements that are absolutely covered in transactions for online shopping, fast food restaurants and pubs and the underwriter hasn’t batted an eye.
“But plonk a tenner on the Grand National and some lenders think you’re a hustler in Vegas.”
Reaction
Justin Moy, managing director at EHF Mortgages:
“Gambling does tend to be a red flag within the underwriting process, and in fairness to lenders excessive behaviour that suggests a potential threat for onward affordability and vulnerability does need to be considered carefully.
“But common sense needs to be applied. Borrowers with more than enough spare income, no background financial issues, and who use gambling as a leisure activity shouldn’t be treated like they’re the Cincinnati Kid.
“A season ticket for your football team is not an issue, but a weekly bet on them winning is a problem? Let’s be realistic and allow the underwriters to put some relevance to each case where necessary.”
Ben Perks, managing director at Orchard Financial Advisers:
“I’ve seen bank statements that are absolutely covered in transactions for online shopping, fast food restaurants and pubs and the underwriter hasn’t batted an eye. But plonk a tenner on the Grand National and some lenders think you’re a hustler in Vegas.
“If gambling transactions are stable and within the borrower’s disposable income limits, what’s the issue? Of course, if transactions are sporadic and of high value this needs to be addressed. Underwriters need to establish a pattern of behaviour and not just tar everyone with the same brush.”
Steven Neale, director and owner at SN Mortgages:
“It is rare for me to agree with a lender, but they are right to refuse a mortgage application because of a client’s gambling debts if, in their opinion, the gambling habits of an applicant look concerning.
“Imagine the uproar if 12 months down the line, the property is repossessed because the applicant cannot afford to pay the mortgage having sadly become addicted to gambling – the press would have a field day.
“Lenders rightly look to mitigate any future problems – think ambulance chasers – so declining a few mortgage applications due to gambling habits of an applicant, makes sense to me.”
Dariusz Karpowicz, director at Albion Financial Advice:
“This is often the case, as borrowers’ profiles, credit history and bank statements are thoroughly scanned and scrutinised by lenders. Unfortunately, even occasional gambling transactions can raise red flags. We seem to be at a point where lending criteria are already quite stringent, and I can see things tightening even further.
“Lenders sometimes struggle to differentiate between a casual flutter on events like the Grand National and serious gambling problems. While protecting financial stability is crucial, it does feel like we’re inching closer to peak nanny state, where even minor financial behaviours are heavily policed.”
Ranald Mitchell, director at Charwin Private Clients:
“Underwriting has sadly become a tick-box exercise for many lenders, often ignoring the nuances of real life. Occasional gambling and the odd flutter shouldn’t be a dealbreaker for mortgage applications.
“While excessive gambling, rising debt or poor household affordability signal vulnerability and merit red flags, that’s clearly not the issue here. The relentless pigeonholing of applicants in this way unfairly denies ordinary people access to mortgage funds.”
Michelle Lawson, director at Lawson Financial:
“Some lenders are starting to be judge and jury of the way people choose to live. The key here is spotting patterns and excessive action.
“With gambling, the concern is on priorities and the amount a borrower is prepared to lose. That said, the odd flutter and regular commitments to the lottery should not be seen as detrimental.
“Some lenders have a percentage limit of income for gambling. Gambling is a habit like eating and drinking so are they applying the same logic for too many visits to the supermarket or pub? Ultimately, does the borrower match the policy? That’s the only question that should be answered.”
Harps Garcha, director at Brooklyns Financial:
“Mortgage underwriting seems to have taken a page from the book of dating online: it’s all about swiping left or right and nothing in between.
“It’s like they’ve replaced the underwriter’s gavel with a ‘yes’ or ‘no’ button, making it feel like a game show rather than a financial decision. And when it comes to gambling transactions, it’s as if one spin at the roulette table is enough to label you a high roller in the eyes of some lenders.
“But fear not, the wise underwriter generally knows that a single bet does not a gambler make, just as one salad does not constitute a diet.”
Craig Fish, director at Lodestone Mortgages & Protection:
“This is unacceptable. In a bid to cut costs, it seems lenders have employed complete novice underwriters with no ability to look or think outside the rigid box in which they work.
“The odd flutter on the football or Grand National isn’t okay, but an underwriter gambling and playing judge and jury with someone’s life choices is? Some lenders have almost lost touch with reality.”
Richard Jennings CeMAP, founder & managing director at Richard Jennings Mortgage Services:
“Whilst gambling is an addiction that can, and does, very easily spiral out of control, in this instance the decline seems excessively harsh. For our own checks, before submitting them to a lender, we review the client’s current account management.
“Where there is the odd gambling transaction, but the account remains in credit with bills paid and a clean credit history combined with stable incomes, then other than noting it we ignore. Where gambling is more frequent on the account then we would consider logging this as a financial commitment, based on the highest monthly spend over the past three months.
“At worst, we would ask for further statements to sanity-check the nature of the gambling. Where does the odd gambling transaction resulting in a decline stop? What about the National Lottery? Does this result in declines now, as this, too, is a form of gambling?”
Ken James, director at Contractor Mortgage Services:
“I am betting this is not the norm, and that the occasional visit to the bookies or a roll of the dice at the casino is not going to get you your mortgage refused.
“If you are constantly chasing a win, putting yourself into financial difficulty, then the lender has no option but to lend responsibly and say No Deal. Each case must be looked at on its own merits.
“As a broker, we are constantly vetting bank statements and spending habits before it reaches the lender’s door. If there is a serious gambling habit it would be foolish to ignore it, but if it’s just the occasional wager it should pose no issues.
“Lenders need to apply sensible underwriting to ensure they do not deem the occasional gambler and over-stretched addicted Gambler as if they are the same, as they clearly are not.”
Samuel Gee, director at Manning Gee Investments:
“The odd flutter is of no real consequence to some lenders, but conservative lenders may see risk with betting, even at very low levels, and despite a clean application in every other area, it is just not a risk they want to take.
“We have got cases through with mainstream lenders where there has been some gambling activity showing, however, we have had hurdles with other lenders who scrutinise bank statements for what some people may deem morally questionable entries.”
Scott Taylor-Barr, principal adviser at Barnsdale Financial Management:
“More through luck than judgment, I have never had this issue, but I have heard of it anecdotally online a few times. The odd bet here and there shouldn’t be a cause for concern if, like all spending, it is within the limits of borrowers’ affordability and isn’t increasing their levels of debt.
“However, sometimes lenders can seem to go very overboard with certain things; we had issues not so long ago where a single pay-day loan, even if well managed, would result in a decline, and we’ve also had lenders decline due to buy-now-pay-later or pay-in-three type arrangements with Klarna or PayPal.
“Often this is an overreaction to a new market trend, which takes a while for the lenders’ risk teams to get sufficient data around to give more informed guidance to the underwriters.
“At other times it is simply an underwriter who is new and overly cautious or one that has recently been pulled up on some of their decisions and is now being overly cautious.”
Elliott Benson, owner at Sett Mortgages:
“With gambling on bank statements, I find usually it is not enough to cause a lender to decline if it is the odd one or two transactions a month. The problems occur when the gambling turns into monthly expenditure in the hundreds or thousands. Then it is probably going nowhere.
“Some lenders might take an average of the expenditure and hold it against the client for affordability but most likely they won’t be comfortable if it looks like it is a serious issue”