The growth in people borrowing into retirement poses problems for mortgage lenders, according to the CML.
Research by the CML showed more than a third of new mortgages taken out will extend beyond the borrower’s 65th birthday but less than 1 per cent of all new lending – including equity release lifetime mortgages – was to this group.
An article published by the CML said: “In a period in which incomes have been growing more slowly than house prices, the challenge for many borrowers is how to demonstrate that they can afford the mortgage that they want.
“Lenders must look carefully at individual borrowers’ plans for repaying their mortgages – as well as the potential for their circumstances to change unexpectedly.”
The article also highlighted the fact that the UK population aged 65 or over is set to go up from 11m to 17m by 2034, when it will account for 25 per cent of the total.
On 22 June, Legal & General launched its branded Lifetime Mortgage product range with market-leading interest rate and feature. This followed the provider’s purchase of specialist equity release provider Newlife in April 2015.
According to figures from L&G/The Mintel Report, the equity release market grew by 29 per cent in 2014, and the lifetime mortgage market is forecast to grow to more than £2.3bn by 2019.
Adviser view
Sarah Fox-Clinch, a mortgage adviser with Bristol-based Fox Davidson, said: “Since MMR lenders have been unwilling to lend to people over 65 because they are unsure what their income will be.
“We find anyone over the age of 55 has issues with accessing finance. We think this is a huge issue in the market and we think it is ageist.”
