MP calls for investigation after banks declined mortgages for employees who were given leave the previous month
MPs are demanding an investigation after it has become known that leading banks in the High Street are refusing mortgage applications for workers on leave.
The claims go directly against Chancellor Rishi Sunak’s promises that people using the government support scheme would not be blacklisted by lenders.
High Street banks, including NatWest, Nationwide, and Lloyds, admit they are rejecting mortgage and refinancing applications from people who took leave in the month prior to their filing.
The banks’ ban has been met with outrage and calls for the Treasury to investigate are increasing.
The move has been labeled ‘disappointing’ and ‘utterly unfair’ by critics of the policy.
Clive Lewis, Labor MP for Norwich South, is calling on the government to intervene to prevent workers’ loans from being denied leave.
High Street banks, including NatWest, Nationwide, and Lloyds, admit they are rejecting mortgage and refinancing applications from people who took leave in the month prior to their filing. Shown: file photo
The banks’ ban has been met with outrage and calls for the Treasury to investigate are increasing. Pictured: NatWest sofa, file photo
Clive Lewis, Labor MP for Norwich South, (pictured left) calls on the government to intervene to prevent workers’ leave from being denied loans, while Duncan Baker, Conservative MP for North Norfolk (pictured right) said he was’ disappointed ‘ was to hear of the policy
He told it Eastern Daily Press it was a cynical attempt by the banks to protect their profits and would be a major concern for people looking to take out a mortgage because of the financial difficulties they faced as a result of Covid.
He called the news “scary to people,” but said it was no “surprise.”
“It reminds me of the 2008 financial crisis, in which the government backed the banks and the second the banks needed to protect their profits, broke the shutters,” he said.
‘They weren’t protecting their customers, they were protecting their money.
“I wouldn’t be surprised if this concern was raised and they all thought, the markets will decide.”
His position was also supported by Duncan Baker, Member of Parliament for North Norfolk, who said he was “disappointed” to learn about the policy.
He said: ‘[For] it is completely unfair that the banks, which have been backed by taxpayers in the past, to turn around and ignore this income guarantee when filing applications, is completely unfair when we try to help ordinary citizens live their lives as best they can. ‘
Last month, the Chancellor used the budget to confirm that leave workers will continue to receive 80 percent of their wages until October, after the scheme was extended a second time.
The move has been labeled ‘disappointing’ and ‘utterly unfair’ by critics of the policy. Pictured: Lloyd bank, file photo
The claims go directly against Chancellor Rishi Sunak’s promises that people using the government support scheme would not be blacklisted by lenders. Pictured: rural, stock photo
Rishi Sunak promised last July that ‘although hardships lie ahead’, no one ‘will be left behind’.
But banks’ policies seem to go against this promise, raising concerns that people who have benefited from the support scheme may not have fully recognized its potential long-term effects.
Jan Hytch, former president of the National Association of Estate Agents, told the Eastern Daily Press: ‘It is a decision of head and heart.
‘On the one hand, banks have a legal obligation to borrow responsibly.
However, that is hugely unfair for the people who are legally on leave and will have a job to return to.
“The problem is, people may have volunteered for, or taken time off, without really understanding its impact.”
The matter came to light after a Norwich man refused a mortgage application by the NatWest bank despite two decades of uninterrupted employment.
His refusal was due to the fact that he has been on leave for several days this year, although he has never been on the scheme full-time.
Last month, the Chancellor used the budget (pictured) to confirm that leave workers will continue to receive 80 percent of their wages until October after the scheme was extended a second time.
He called the blanket ban “not a good impression” for the banks and said it would cause additional concern for already struggling families badly affected by the pandemic.
The man, who chose to remain anonymous, said the banks ‘pay little attention’ to their loyal customers.
“I understand that in the current climate, banks are reluctant to borrow money, but there could certainly be more nuance than a blanket“ you have been on leave for a few days, so we will not accept the approach to applications for this ”. he said.
‘It would not be difficult for them to ask applicants to have their employers send letters of support stating that the leave is for a finite period and will end. Instead, they say no. ‘
A Lloyds bank spokesperson told Mail Online, “As a responsible lender, we make decisions based on a full understanding of customers’ individual circumstances.
‘Since September we need new applicants who have been given leave to demonstrate that they are now fully paid by their employer. This is the approach taken by most mortgage lenders in the industry.
“We remain committed to the mortgage market and over the past year have supported clients who have seen changes in their financial situation as a result of the pandemic.”
A NatWest spokeswoman said: “We will continue to support clients who return to work after leave to apply for a mortgage with us, but this now requires that they provide at least one month of full proof of their income.”
Nationwide added, ‘We remain committed to supporting people who want to move or buy their first home, and we continue to lend to all segments of the market. However, affordability should remain an important consideration when considering mortgage applications, especially in these uncertain times.
“That’s why Nationwide doesn’t accept leave income when considering affordability as part of the mortgage or refinancing application process.”
The Treasury Department told Mail Online that decisions about loan availability and the application process are for lenders.