22 Aug 2009

Mortgage brokers claimed last night that banks and building societies were turning down between 60pc and 80pc of applications for home loans.

Potential house buyers are being refused mortgages because of fears about the security of their jobs and because they have insufficient savings, a survey of members of the Professional Insurance Brokers Association (PIBA) has found.

The research, seen by the Irish Independent, also found that it was taking far longer to close a loan.

However, last night the Irish Banking Federation said that many of those who were being approved for mortgages were showing a reluctance to draw down their loans.

This would indicate that potential first-time buyers were sitting on the fence waiting to see if house prices would fall further.

PIBA’s research shows that mortgage applicants were being turned down because their credit record was impaired or because they were not able to produce enough bank statements.

A lack of savings was cited by lenders as another reason to reject mortgage applications.

Director of mortgage services at PIBA, Rachel Doyle, accused lenders of “cherry picking” the best mortgage applicants.

“The banks have introduced much stricter criteria over the course of the last year. Job security is now scrutinised very carefully with lenders favouring those with secure pensionable jobs.

“Lenders are looking for records of savings, bank statements showing salary credits and disregarding overtime,” she said.

“While we expect lenders to apply prudent lending practices, the reality is that they are now applying excessively cautious criteria.”

A spokesman for the Irish Banking Federation said its members were fully committed to facilitating home ownership.

“Notwithstanding the very challenging environment, six in 10 of all new mortgages issued today are to home purchasers either first-time buyers or movers.”