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AIB reverses 'de-facto ban' on mortgage approval for wage subsidy recipients

The bank said that it may still refuse to allow a mortgage to be drawn down if it finds a customer is unable to meet repayments.

Image: Shutterstock/Michael Dechev

AIB HAS SAID it will start accepting new mortgage applications from customers who are being paid through the Temporary Wage Subsidy Scheme.

However, the bank said that it may still refuse to allow a mortgage to be drawn down if it finds a customer is unable to meet repayments. 

AIB was among a number of Irish banks who were being called on to reverse a ‘de-facto ban’ on mortgage approval for customers who are in receipt of the State’s Covid-19 subsidies.

A number of mortgage applicants who had received approval before the Covid-19 crisis have had this approval pulled by banks, despite many earning the same now as they were before the pandemic.

Recently TheJournal.ie reported that one couple who were about to move into a home prior to the pandemic restrictions in March were told by their bank that they wouldn’t be able to draw down their mortgage because one of them is on the wage subsidy scheme.

This is despite already signing contracts and paying their deposit on a new build home outside Dublin. 

In a statement this evening, an AIB spokesperson said:  

As the Irish economy re-opens and increasing numbers return to work, AIB will from next week commence accepting new mortgage applications from customers who are on the State’s Covid-19 supports.  However, in line with normal procedures, the final assessment of the customer’s ability to meet repayments is always made shortly before drawdown.

“AIB is obliged to ensure that all loans are sustainable and affordable. In assessing an application for a mortgage, the lender must adhere to all legal and regulatory requirements to ensure the long-term sustainability of the loan.”

The mortgage process – from application to drawdown – typically takes an average of six to nine months to complete, and occurs in four phases – application, approval in principle, letter of offer, to drawdown.

AIB said applicants who have already received a letter of offer will be dealt with on a case-by-case basis.

It added that it does provide mortgages to customers who already hold letters of offer and who are in receipt of wage subsidies.

“The bank urges all customers with a letter of offer, which is valid for six months, to contact us if they have not already done so.” 

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Earlier this week, Sinn Féin finance spokesperson Pearse Doherty said he wrote to the CEOs of the five main banks requesting clarity on this de facto ban and the status of deposits paid by customers who have now been rejected a mortgage.

“This blanket ban will affect countless customers despite the fact that they have not lost their job, and have seen neither their income nor their hours reduced. Their employment is secure. Such a blanket ban takes no regard of this fact,” he said. 

Housing Minister Darragh O’Brien also said “the blanket nature” of a de-facto ban on mortgage approval needs to be addressed.

“I think what isn’t being done by the banks in the anecdotal evidence that I have, is they’re not looking specifically at each case, so they’re not looking at the employer, and those types of things. It’s been a blanket approach, that’s the issue so we’re going to do our best to grapple with that and to resolve it.”

O’Brien said he would also examine whether this issue is impacting Rebuilding Ireland loan applicants. 

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