More lenders bring in tighter rules for mortgage seekers
Some borrowers receiving wage subsidies will need assurances from employers
Several Irish lenders have introduced tighter checks and stricter conditions on mortgages for those in receipt of Covid-era wage subsidies.
In some instances, borrowers will have to produce evidence from their employers that their wage is sustainable after subsidies elapse. In couples where one person is on a wage subsidy, some lenders will insist the second partner is able to cover the entirety of the mortgage with their wage.
It comes after The Irish Times revealed yesterday that AIB had set a de facto block on mortgage lending to those in receipt of the temporary wage subsidy scheme (TWSS).
Permanent TSB said customers on the scheme can draw down their loans “subject to their employers providing assurance on the sustainability of their income when the TWSS comes to an end”.
Finance Ireland, a non-bank lender which is more than 30 per cent owned by the State, said “where an application has been materially affected by a Covid-related subsidy, loans cannot be drawn down until a return to regular income can be evidenced”.
A spokeswoman for Ulster Bank said it was accepting new mortgage applications where one or both applicants were on the wage subsidy scheme. However, it said it would require “confirmation of income and employment” before advancing a loan offer. It is understood Ulster Bank will insist that where one applicant in a couple is on a wage subsidy, the second applicant who is not must be able to cover the entire loan.
Bank of Ireland said it was still lending to those in receipt of the subsidy. The bank said that while a number of applications had been “deferred”,
“mortgages are drawing down daily for customers in receipt of the Government subsidy where overall sustainable affordability has been satisfied”.
“Where income has changed, we are liaising with customers to understand their updated circumstances and assess if these are expected to change again in the future.”
AIB’s policy drew criticism from both the Taoiseach and the Minister for Public Expenditure and Reform yesterday.
Michael McGrath said he was “not happy” about the development, and had “conveyed his opposition and concerns” to banking groups and the governor of the Central Bank.
AIB has said its policies are kept under review, and that it is “imperative the mistakes of the past are not repeated”.
Brian Hayes, chief executive of the Banking and Payments Federation of Ireland, said lenders had a “legal and regulatory requirement” to lend prudently. “[Banks] have a fundamental responsibility to lend in this environment, but they cannot do reckless lending,” he said.