Banks hesitant to give mortgages to people working in Covid affected sectors
Prospective homeowners who work in one of the sectors hit hard by the coronavirus crisis, may find it even more difficult to get a mortgage. All lenders now use an extra coronavirus questionnaire that mortgage applicants have to complete, and ING and ABN Amro even require employers to sign a statement saying they don't intend to fire the applicant, RTL Nieuws reports.
"Do you expect your income will be negatively affected by the coronavirus in the coming year?" is one of the questions on the coronavirus questionnaire, according to the broadcaster. "And if so, is it due to the loss of overtime, (partial) unemployment, the loss of commission, or fewer working hours?"
"You can see that the belt is being tightened in a number of sectors," Michiel Meijer of the Van Bruggen Advisory Group said to RTL. "In the past, you just got a mortgage if you had a contract for an indefinite period. In the affected sectors that is no longer sufficient. You also have to estimate the consequences of the corona crisis" This now applies to the events sector, the cultural sector, tourism, and the catering industry, he said. "The acceptance process is now a lot stickier. It is not the case that those employees can no longer get a mortgage. But often the banks want to only finance a lower amount."
ING and ABN Amro are going a step further. They require that the applicant's employer sign a statement in which human resources declare that the company does not intend to fire the employee, even if the applicant has a permanent contract. Venn Hypotheken will also call the employer to check whether the answers on the questionnaire are correct, according to the broadcaster. This could lead to unpleasant situations in which a home purchase is endangered because a company has not yet told its employees that layoffs are looming.
According to Meijer, about 10 percent of mortgage applications are currently initially rejected, compared to 4 percent normally. "More securities must them be provided or more own money is required," he said to the broadcaster. Ultimately, about 3 percent of applications don't go through, that was 1.5 to 2 percent. It also takes longer for a mortgage to be completed.
De Hypotheker hasn't noticed many applications being rejected due to the coronavirus questionnaire, but does see that more customization is required than usual. "For example, if a mortgage applicant temporarily has less salary due to corona, but can demonstrate this will recover in the future, a mortgage application may still go ahead," a spokesperson said to RTL. "In addition, many potential home buyers can also assess their chances themselves. If you work in a sector that is hard hit by corona and you have less income, it is wise to postpone the purchase of a house for a while."