Mortgage lenders accused of discriminating against pregnant women
In April 2014, changes to the way that mortgages were agreed came into force with the aim of making lenders more responsible. As part of the Mortgage Market Review (MMR), banks and building societies were required to make a more thorough assessment of an applicant's income and outgoings in order that they could better determine that a home loan was going to be affordable in the long term.
One result of the changes has been that pregnant women are finding it harder to get a new mortgage. The Financial Ombudsman has reported that expectant mothers increasingly feel that lenders are discriminating against them and have received a number of enquiries from women whose mortgage applications have been rejected.
Lenders declining applications from pregnant women on affordability grounds
The Daily Telegraph reports that the Financial Ombudsman has received a number of enquiries from women who say their mortgage application has been rejected due to the fact they are due to go on maternity leave.
Under current mortgage regulations, lenders are required to ask a series of tough questions about borrowers' incomes and outgoings, including any anticipated changes to their circumstances in the future. This was designed to avoid a repeat of the 'credit crunch' by ensuring home loans are affordable, but critics have accused banks of adopting a 'computer says no' style approach to lending.
Many interest-only borrowers and older customers have complained about being rejected for a new mortgage despite a clean credit history and an impeccable payment record and it is now the turn of pregnant women to face problems in the face of the new rules.
Chief ombudsman Caroline Wayman says: “It goes without saying that being pregnant – or taking maternity leave – should not automatically preclude you from taking out a mortgage. It does, though, pay to be realistic. A lender has a responsibility to make sure you’re not overextending yourself and that, by granting a mortgage, it is not going to cause you financial difficulties later.”
Wayman adds: “As with age-related restrictions, we don’t think it’s fair to penalise people solely because lending procedures don’t allow for being ‘too old’ or pregnant. Provided, of course, that you could still demonstrate your ability to pay even if your circumstances changed.”
The newspaper reports that so far, none of those making enquiries have formally complained. However, in a previous case, the Financial Ombudsman told a lender to reconsider an application.
Wayman explains: “The lender was declining consumers because they said they would not be able to afford the mortgage because they were pregnant and would be going onto maternity leave. “They were doing so on the basis of an assumption that the consumer could not afford the mortgage, rather than an assessment.”
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