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Call for banks to reverse 'de-facto ban' on mortgage approval for wage subsidy recipients

Applicants who received approval before the Covid-19 crisis have had approval pulled.

SINN FÉIN HAS called on Irish banks not to implement a ‘de-facto ban’ on mortgage approval for customers who are being paid through the Temporary Wage Subsidy Scheme.

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

Recently 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. 

We also asked the five main banks – AIB, Bank of Ireland, Ulster Bank, KBC and Permanent TSB – for their response to why customers who were previously approved for mortgages were now being told that approval was being pulled. 

Each one said they had to be prudent when providing mortgages and offer drawdown based on the last available financial information of applicants.

The Irish Times this week revealed internal AIB documents show it has introduced wide-ranging restrictions on mortgage lending in light of the Covid-19 pandemic, including a de-facto ban on mortgage lending to those in receipt of the wage subsidy. 


Sinn Féin finance spokesperson Pearse Doherty said he has written to the CEOs of the five main banks requesting clarity on the situation. 

The Donegal TD has written to the CEOs of the five retail banks requesting clarity on the application of this de facto ban and the status of deposits paid by customers who have now been rejected a mortgage.

“Myself and Deputy Mary Lou McDonald raised this issue with AIB last month and were told that no such blanket policy existed. It is clear that this has now changed,” he said.

“This is neither proportionate nor fair, and will effect more than 400,000 workers availing of the Temporary Wage Subsidy Scheme.

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.

Speaking to Newstalk Breakfast, Housing Minister Darragh O’Brien said “the blanket nature” of the ban is an issue.

“I understand financial underwriting and how and why it’s important and that when someone gets a mortgage offer that it is contingent on circumstances not changing,” he said.

“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 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 on Rebuilding Ireland loan applicants. 

- With reporting by Orla Ryan.  

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