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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.”
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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All I’m learning from these “mishaps” is everyone should leave AIB
@Whatever: 100 percent
@Whatever: where do you go, BOI, UB,EBS, PTSB, KBC all had this policy. At least aib reversed it
@Whatever: That’s not going to be very beneficial to a bank you own.
No win for the banks, this time they are actually doing the right thing!
Potentially these are very high risk loans in todays environment.
@Rory Moran: hmm in ‘today’s environment’ every loan is a high risk loan….it’s only 3 months ago that we were being told the ‘all in this together’ line , that Govt had to force closedown of business and through no fault of their own people would have to stay home and wage subsidy would be introduced to stop carnage – and lo and behold as soon we reopen in no time the banks ( who don’t forget had been bailed out by taxpayers ) immediately chucked out the ‘all in this together’ approach and reverted to the usual – we will give you the umbrella when it’s sunny and take it off you when it’s raining approach….it is good to see this being reversed – now its time to get the government to try align our country with the rest of Europe when it comes to the mortgage interest rates charged in Ireland – which are some of the most expensive in the EU single market at a time when interest rates in the EU are all time low – there should be no more hiding behind the nonsense that ‘Ireland is different’ when it comes to allowing them charge 3 or 4 times more for mortgages here than in Germany and France – we were constantly reminded during Brexit debate that we are better off in EU single market – the benefits of single market etc – then let’s see us get mortgages the same as Germany etc – it is doable and needs the political will to press this issue for Ireland – ditto for single market insurance – these EU wide insurers have a 500 million market taking out motor policies – we should be able to get EU benefits instead of the localised fleecing from insurers we see year after year ….rant over ;-)
@Dave Hammond: your comments about higher interest rate are fair but the rest is flawed. For one, looking for a mortgage while in receipt of any government payment subsidy does not make sense, that word risk come in again. It is the largest loan an individual or couple will ever take on. Th additional scrunity is protect the borrower and the lender.
@Rory Moran: Just to be clear – Nobody is objecting to reasonable risk assessment , nobody thinks the banks shouldn’t be assessing on a case by case basis and nobody is saying that we should be rushing head first into silly buggar lending – but the blanket approach that said once there was covid payments involved then the loans would be paused was grossly unfair – there are plenty of people who circumstances were effectively paused and ended up on covid supports and the bank should not be blanket approaching this – which is why they reversed this action and have reverted to case by case – which is sensible – the fact they reversed is an admission that they may have handled this whole thing incorrectly in the first place – they should have just used common sense and applied case by case approach and avoided this whole nonsense imo.
“As a young person on average income I can’t get a mortgage to buy my own home but it’s ok for me to pay rent and pay some one else’s ….
Bank of Ireland is a bloodly nightmare
Was AIB called upon not to reverse a de-facto ban ?
Recieved a tiny refund for bank charges 2 months ago. Yesterday they deducted triple that from my account. So much for not charging during the COVID-19 crisis…
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