Banks ‘up to their old tricks’ on mortgage refusals

The main banks have been accused of getting “up to their old tricks” by “manipulating” the system to prevent people accessing a low-interest mortgage scheme.

Former OPW minister Seán Canney says banks are neither approving mortgages nor issuing refusals in some cases, meaning first-time buyers cannot access the Rebuilding Ireland home loan.

The scheme, operated by local authorities, provides mortgages to first-time buyers who do not qualify for social housing but do not earn enough to get finance from a commercial lender.

To access the low-interest loans, couples and individuals must have been turned down by two mortgage providers.

However, Mr Canney has claimed the main banks are now stringing people along instead of providing them with the refusal letter that they need to apply to the local authority.

He wants the Government to change the stipulations for the scheme to make it easier for people to apply, and has spoken to Housing Minister Eoghan Murphy.

“What happens is when you go for this new Rebuilding Ireland home loan from the local authorities, you have to have two refusals from two banks, and I know of evidence where people have gone to the banks and the banks are frustrating them in their applications in not granting them or not refusing.

“They are saying ‘we will look at it again’ or are saying they need extra information, or are asking people to wait another while to save a bit more money and they will reconsider it,” the Galway East TD said.

Urging the Government to act and close this loophole, he said: “The banks are up to their old tricks; they are manipulating things to try and hold on to these customers, because they see them as a customer for the next 25 to 30 years.

 

“These are people who want to buy or build their own houses, they are not looking for anything off the State — they just want a bit of a break.”

 

The low-interest loans were announced by Mr Murphy in January this year. By the end of May the Housing Agency had received 1,499 applications for assessment from the local authorities. Of these, 349 were considered invalid. The agency was processing a further 274.

Of the 876 that it had assessed 458 (52%) were recommended for approval.

A spokesman for Mr Murphy said his department would examine any evidence that banks are frustrating the system, adding that this would not be accepted.

Bank of Ireland said it considers each customer’s application on a case-by-case basis.

KBC said it issues decline letters to customers who do not meet the criteria to qualify for a KBC loan; while Ulster Bank said there are no delays in issuing these letters.

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