AIB has announced a policy U-turn that will see it accepting mortgage applications from those on the State's Covid-19 wage subsidy from next week.
However, such customers may still face significant hurdles in drawing down mortgages if they are in receipt of the subsidy. AIB’s previous policy, which was reported by The Irish Times earlier this week, had been to pause all applications from those in receipt of the subsidy.
In a statement, the lender said that “as the Irish economy reopens 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”.
It follows pressure on the lender after The Irish Times revealed a policy of putting the brakes on all applications from those on the wage subsidy scheme.
The policy change affects the first stage of securing a mortgage. There will still be significant scrutiny of applicants in receipt of a subsidy before any funds are actually advanced.
AIB declined to comment on whether any conditionality specifically attached to the Covid-19 subsidy would kick in as applicants moved from approval in principle, through to a letter of offer, and on to the actual drawdown of funds. That process usually takes between six and nine months, the lender said.
“In line with normal procedures the final assessment of the customer’s ability to meet repayments is always made shortly before drawdown,” a spokesman for the bank said.
Several lenders confirmed this week that they have put additional scrutiny and conditions on those in receipt of wage subsidies before drawdown. For example, both Permanent TSB and mortgage specialist Dilosk are asking customers to provide evidence from their employer that their post-subsidy income is "sustainable" before approving the drawdown.
Others, such as Ulster Bank, require that where a joint applicant is made in which one party is on the subsidy, the other party must be able to cover the mortgage in its entirely.
Such policies may place the mortgage out of the reach of many customers who cannot clear these hurdles.
AIB said it “does provide mortgages to customers who already hold letters of offer and who are in receipt of the State’s Covid-19 subsidies”, and that drawdown approval is made on a case-by-case basis.
“In order to protect the customer, the bank and the wider economy against the risk of future financial difficulty, 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 bank said that it keeps its mortgage-lending policies under constant review.