8th October 2015
Concerns are rising that mortgage lenders may be penalising women for starting a family.
New research claims that nearly one in 10 young women, at 9%, who have applied for a mortgage in the last decade, said they were discriminated against by lenders on the basis that they were pregnant or intending to have children.
The survey from uSwitch.com also revealed that 25% of female home buyers said they have intentionally hidden their family plans from lenders, fearing they will miss out on the best mortgage rate or even be rejected.
The price comparison site carried out the research following the introduction of the Mortgage Market Review in April 2014, which ushered in much stricter lending criteria and checks.
The legislation brought in by the City watchdog, the Financial Conduct Authority, means that lenders may now refuse to grant a mortgage if they believe an applicant is unable to meet the repayments due to an expected drop in income.
But the perception that having a family may impact their ability to get the best mortgage deal is driving many women to withhold information from lenders during the application process, according to the switching service’s survey of 2,000 female mortgage applicants.
Of those confessing to hiding their plans from their lender, three quarters, at 77%, did so for fear of their application being rejected or missing out on the best rate.
Unfortunately though, the pressure of concealing this information is having a significant emotional impact. Some 71% of women who concealed their family plans from lenders experienced high levels of stress and anxiety during the mortgage application process.
In order to cope with any drop in income, almost half of women, at 48%, save up before going on maternity leave to cover monthly mortgage repayments and other essential household bills while 79% of women believe that savings should be taken into account when applying for a mortgage.
Overall, some 27% of women think the current affordability criteria is out of step with modern family finances but, in the meantime, 11% would still put their family plans on hold to secure a mortgage on their dream home.
Tashema Jackson, money expert at uSwitch said: “While it’s vital that lenders help people only borrow within their means and ensure they can afford future payments, it’s not fair for lenders to make blanket assumptions. Those planning a family may be able to manage their repayments even with a drop in household income, thanks to careful planning or savings.
“We believe lenders should be making decisions based on a broader picture of an applicant’s financial situation, including the amount that they have in savings, rather than on assumptions about a woman’s personal circumstances or intentions.”
Jackson said anyone who feels they have been discriminated against for any reason, should lodge a complaint with the mortgage provider before escalating to the Financial Ombudsman Service.