MPs are demanding an investigation after it emerged leading High Street banks are refusing mortage applications for furloughed workers.
The claims directly go against promises made by Chancellor Rishi Sunak that people using the governement support scheme would not be blacklisted by lenders.
High Street banks including NatWest, Nationwide and Lloyds admit they reject mortgage and remortgage applications from people who were furloughed in the month prior to their application.
The banks’ ban has been met with outrage and calls are mounting for the Treasury to investigate.
The move has been branded ‘disappointing’ and ‘wholly unfair’ by critics of the policy.
Clive Lewis, Labour MP for Norwich South, is calling for the government to step in and prevent furloughed workers being refused loans.
High Street banks including NatWest, Nationwide and Lloyds admit they reject mortgage and remortgage applications from people who were furloughed in the month prior to their application. Pictured: file photo
The banks’ ban has been met with outrage and calls are mounting for the Treasury to investigate. Pictured: NatWest bank, file photo
Clive Lewis, Labour MP for Norwich South, (pictured left) is calling for the government to step in and prevent furloughed workers being refused loans, while Duncan Baker, Conservative MP for North Norfolk (pictured right) said he was ‘disappointed’ to learn of the policy
He told the Eastern Daily Press it was a cynical attempt by the banks to protect their profits and would be of great concern to people looking to remortgage due to financial difficulties suffered as a result of Covid.
Calling the news ‘frightening for people’, he nevertheless said it was not a ‘surprise’.
‘It reminds me of the financial crisis of 2008 which saw government prop up the banks and then the second the banks needed to protect their profits the battened down the hatches,’ he said.
‘They didn’t protect their customers, they protected their money.
‘It would be no surprise to me if this concern has been raised and they all simply thought: the markets will decide.’
His stance was also backed by Duncan Baker, MP for North Norfolk, who said he was ‘disappointed’ to learn of the policy.
He said: ‘[For] the banks, who have been supported by the taxpayers in the past, to turn around and then not take this guarantee of income into account on applications is wholly unfair when we are trying to support ordinary citizens live their lives to the best of our abilities.’
Last month, The Chancellor used the Budget to confirm that furloughed workers will continue to receive 80 per cent of their wages until October after the sceme was extended for a second time.
The move has been branded ‘disappointing’ and ‘wholly unfair’ by critics of the policy. Pictured: Lloyd bank, file photo
The claims directly go against promises made by Chancellor Rishi Sunak that people using the governement support scheme would not be blacklisted by lenders. Pictured: Nationwide, stock photo
Rishi Sunak pledged in July last year that ‘although hardship lay ahead’, no-one would be ‘left behind’.
But the banks’ policy appears to go against this promise, prompting fears that people who took advantage of the support scheme may not fully have registered the potential long term impact of doing so.
Jan Hytch, former president of the National Association of Estate Agents, told the Eastern Daily Press: ‘It’s a head and heart decision.
‘On the one hand, banks have a legal obligation to lend responsibly.
‘However, that is hugely unfair on the people who are legitimately on furlough and will have a job to return to.
‘The problem is that people might have volunteered for, or taken furlough, without truly understanding the impact of doing so down the line.’
The issue came to light after a man from Norwich was refused a remortgage application by NatWest bank, despite having two decades of unbroken employment.
His refusal was due to the fact he has been on furlough for a number of days this year – although he was never on the scheme full time.
Last month, The Chancellor used the Budget (pictured) to confirm that furloughed workers will continue to receive 80 per cent of their wages until October after the sceme was extended for a second time
He called the blanket ban ‘not a good look’ for the banks and said it would cause additional concern for already struggling families hard hit by the pandemic.
The man, who chose to remain anonymous, said the banks are giving ‘hardly a consideration’ to their loyal customers.
‘I can understand banks being reluctant to lend in the current climate, but surely there could be more nuance than a blanket “you’ve had a handful of days on furlough so we’re not accepting applications’ approach to this”. he said.
‘It wouldn’t be hard for them to ask applicants to get their employers to send letters of support, stating that furlough was for a finite period and will be ending. Instead, they’re saying no.’
A Lloyds banking spokesperson told Mail Online: ‘As a responsible lender, we make decisions based on a full understanding of customers’ individual circumstances.
‘Since September, we require new applicants who had been furloughed to demonstrate that they’re now being paid in full by their employer. This is the approach being taken by most mortgage lenders in the industry.
‘We remain committed to the mortgage market and over the past year we have supported customers who have seen changes to their financial circumstances as result of the pandemic.’
A NatWest spokeswoman said: ‘We continue to support customers who have returned to work following furlough to apply for a mortgage with us, however this now requires providing at least one month’s full evidence of their income.’
Nationwide added: ‘We remain committed to supporting those looking to move or buy their first home and are continuing to lend to all sections of the market. However, affordability must remain a key consideration when considering mortgage applications, especially during these uncertain times.
‘That is why Nationwide is not accepting furlough income when considering affordability as part of the mortgage or remortgage application process.’
The Treasury told Mail Online that decisions about the availability of loans and the application process are for lenders.