Furloughed workers now struggling to get a mortgage
Workers who have been on the furlough scheme for a long time are being perceived as increasingly high risk by mortgage lenders, according to broker Private Finance.
When furlough began in March 2020 lenders would base applications on whether the mortgage was affordable at 80% of incomes.
However if people have been on furlough long-term lenders are anticipating that their job roles may no longer existing when the extended scheme finally finishes at the end of March 2021.
A number of lenders don’t accept furloughed income at all, while some only do if employers set a return to work date in a letter.
Chris Sykes, mortgage consultant at Private Finance, said: “With the new lockdown it is predicted that there are up to 5.5 million on furlough [Institute for Employment Studies], this is a huge amount of people that are unable to get a mortgage, not able to remortgage and thus could be stuck with their current lender and move on to standard variable rate.
“If we consider joint applications with one furloughed worker and one full-time employed worker this will be even more people if they are unable to meet affordability on one income.
“Whilst unfortunately a number of these people will not have work to return too – it may create pent-up demand amongst those that do who are looking to purchase a new property as soon as they revert to full time work.”
NatWest requires that employed customers will need to have returned to work following any period of furlough and received their first full month’s payslip before mortgage applications can be submitted and underwritten.