Mortgages  

Specialist calls for lending flexibility for older borrowers

Specialist calls for lending flexibility for older borrowers

Equity release provider Key Retirement has called for banks and building societies to be more flexible on lending to older borrowers, as its research reveals many over 45s still expect to be in debt when they retire.

The firm commissioned Research Plus to conduct an online survey amongst 3,052 UK non-retired adults aged 45 and over.

The research found that nearly one in five over-45s expect to retire in debt or are unsure they will clear all their debts before they can afford to stop work. Furthermore, ten per cent do not expect to clear all their debts before retirement while another nine per cent are unsure if they will be able to.

Article continues after advert

Key Retirement suggested that this underlines the need for banks and building societies to be more flexible on lending to older borrowers.

The introduction of the Mortgage Market Review in April led to concerns about mortgage lenders being unwilling to lend past standard retirement ages, with some companies demanding loans are paid off by State pension ages, while others insist mortgages are cleared by 70.

The research found that 53 per cent of over-45s owe money on credit cards, mortgages, personal loans or other finance arrangements.

Dean Mirfin, group director at Key Retirement, said that access to credit is a major issue for many people as they get older, as demand remains high while lenders remain wary and the risk of rejection is high.

“Lenders have to be responsible and ensure that customers can afford to repay but at the same time there are millions of over-55s who are creditworthy and should be able to borrow responsibly.

“The interest-only mortgage issue, where many homeowners have looming deadlines to clear capital, highlights the need for new products and new thinking which potentially can include equity release.”

The study also found people aged 45+ in Northern Ireland are most likely to have debts with 63 per cent saying they owe money on credit cards, loans, mortgages or other finance arrangements, while people in London are the least likely, with just 45 per cent saying they owe money.

peter.walker@ft.com