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No mortgage offers for workers on furlough, says Danske Bank

Danske Bank

Danske Bank has said it will not be making mortgage offers to furloughed workers as lenders continue to tighten borrowing criteria during the Covid-19 pandemic.

According to HMRC figures from last month, there are around 240,000 furloughed workers in Northern Ireland.

The scheme was introduced at the start of lockdown, with employers signing up for 80% of employees wages to be paid by the Government, up to a maximum of £2,500 per month.

But with fears that furloughed workers could ultimately lose their jobs when the scheme finishes in October, they are now being regarded as a less attractive prospect to lenders.

The scheme is already being wound down, with employers to contribute towards the wages.

Lenders also reduced the availability of 90% mortgages for first-time buyers who can afford only a small deposit, though one lender confirmed it had now reintroduced a 90% product.

A Danske Bank spokesman said: "We are open for business and continue to support the housing market. Throughout the crisis we have continued to draw down mortgages and are currently lending up to 85% loan to value.

"As a responsible lender we consider a range of factors to assess the affordability of the mortgage in the long-term. At this time we are not accepting mortgage applications from customers who are on furlough but we will keep this under review."

Nationwide Building Society said it will consider applications from people who have been furloughed but added "those on furlough are not eligible for the society's recently launched 90% loan to value first-time buyer mortgages".

Bank of Ireland said: "We are lending to customers who are furloughed. We'll ask customers to provide some information about the terms of the furlough during the application process."

Lender AIB said: "All our lending is based on the customer's ability to repay. This is to protect the customer from undue risk. Applications are dealt with on a case by case basis."

Ulster Bank said it was “strongly committed to lending to all kinds of mortgage borrowers - this includes those on furlough and those returning from furlough”.

“As always, they base lending decisions on affordability and ability to repay and they take each case on an individual basis.”

A spokeswoman for Progressive Building Society said it is “a responsible lender and reviews and assesses every case on an individual basis including the income and expenditure of all applicants”.

HSBC said it will not lend to furloughed workers whose return to work date is further than three months away or there is no return date at all.

Mortgage broker and advisor London & Country said: “Mortgage lenders have sought to support those on furlough through the lockdown period and in the main have continued to accept furloughed income when considering how much they can offer to borrowers.

“That would of course often mean a reduced income and consequent reduction in the size of borrowing available but at least most lenders would be able to consider lending.

“As we move closer to the unwinding of the jobs retention scheme borrowers should expect to see more questions about return to work and some lenders are now stipulating that they will want some confirmation. “Getting employer confirmation may not be possible for all at this stage but on the upside those that can, may be able to use their return to work income for the affordability assessment.

“That approach will be consistent whether for first time buyers or next time buyers as lenders will need to be able to demonstrate that the mortgage is affordable and will remain sustainable.

“However the market is still light on deals for those with small deposits which is often a bigger issue for first time buyers and some of the lenders that have returned to the 90% LTV market will potentially set a higher expectation when it comes to credit score.”

Belfast Telegraph