TSB Restricts Lending for Furloughed Workers
TSB has tightened mortgage lending criteria for workers who have been furloughed during the coronavirus crisis and whose employers aren’t topping up their salaries.
The furlough scheme currently pays 80% of an employee’s usual salary, up to £2,500. However, greater contributions will be required from employers from August and the scheme will end in October. Nearly nine million people—or one in four workers—has been furloughed under the programme.
Furloughed income has helped many Britons stay on top of bills and afford necessities. But with the threat of mass layoffs looming, lenders are becoming wary of accepting the money as income in mortgage applications.
From 20 July, TSB will no longer count income from furloughed borrowers who aren’t having their salaries topped up by their employers. Barclays notified brokers of the changes in an email this week, saying it was making the changes to ensure it is “lending responsibly.”
Previously TSB had required furloughed staff supply a letter from their employer, dated within four weeks of the mortgage application, confirming their continued employment and the date they expect to return to work and whether it would be full- or part-time.
Now that assurance doesn’t seem sufficient.
The bank now appears to be concerned that employees who aren’t receiving contributions from their employers are at risk of redundancy.
TSB has good reason for the concern. A YouGov poll of employers found that half say they'll have to dismiss staff within three months of the scheme ending. Just a third of employers said they wouldn’t have to let anyone go.
TSB will still accept applications from joint applicants who can afford the mortgage solely with the non-furloughed worker’s income. In these cases, the furloughed applicant’s income will be listed as £1.