Do UK lenders treat large mortgage applications from women who are pregnant or lending to those on maternity leave fairly?
In 2011, concerns that women were being unfairly discriminated against when seeking mortgage led to a Government review into the issue. Now, the Council of Mortgage Lenders and the Building Societies Association are set to publish formal guidance before the end of 2013 to help lenders deal with high value mortgage applications from pregnant women or those on maternity leave.
Keep reading to learn more about the proposals.
In 2011, a Government review into lending to women was commissioned by the Deputy Prime Minster. This review, Banking on Women, followed a review of evidence by Professor Noreena Hertz, which suggested it was ‘very likely’ that discrimination was happening in mortgage lending to women who were pregnant or on maternity leave.
While the report did not find evidence of a systemic problem, it said that there is a long-standing perception that banks discriminate against women, which could act as a deterrent for women in accessing finance from banks.
Now, the Council of Mortgage Lenders and the Building Societies Association are set to produce guidance for lenders to ensure they are not treating pregnant women or women on maternity unfairly when they apply for a mortgage.
“This is a sensible move by these organisations to establish exactly what consumers believe is far and what they feel is appropriate to be asked when applying for a mortgage,” said Islay Robinson, CEO of London mortgage adviser Enness Private Clients.
“The review will involve asking the public what they believe to be permitted questions and lines of enquiry when a lender assesses affordability. We expect to see this guidance by the end of 2013 and it will help lenders to ensure that they are dealing solely with a client’s ability to repay and not discriminating against those borrowers on maternity leave or who are pregnant.”
BSA head of mortgage policy Paul Broadhead says: “It is clear that we are dealing with perception here but there is still no room for complacency, particularly in the run up to the implementation of the new mortgage rules from the Financial Conduct Authority. These will see lenders having to ask many more questions of all mortgage applicants to ensure loans are affordable.”
A CML spokesman says: “We welcome the report because even though gender discrimination in financial services is something of a myth, the perception of it is important to address. It is also important not to mistake responsible lending for discrimination.
“Both men and women should expect their lender to assess their circumstances carefully to enable them to make good, sustainable lending decisions.”
Minister for Women and equalities Jo Swinson says: “We believe there is scope for improvement with lenders thinking through much more than perhaps they have up to now how they deal with mortgage applications from women who are pregnant or on maternity leave.
“I am pleased that the Council for Mortgage Lenders and the Building Societies Association have suggested actions to address this.”