Mortgages  

CML working group will address older borrowers

CML working group will address older borrowers

The Council of Mortgage Lenders has unveiled details of its working party, which will look at the issues faced by the growing number of borrowers age 65 and over, including pension reforms.

Paul Smee, director general of the CML, said the group will consider pension reforms and how mortgage lending may be affected by the recent pension changes.

It will also have to take into account how lending has been shaped by the requirements of the FCA, the Prudential Regulation Authority, the Financial Ombudsman Service and others.

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According to Mr Smee, the industry must explore ways of ensuring that older borrowers, who can afford to take out mortgages, are not precluded from doing so simply because of their age.

He said the number and proportion of borrowers paying off some of their mortgage beyond retirement age has continued to rise, highlighting official figures showing that by 2023, 24 per cent of all adults will be aged 65 or older.

Mr Smee said: “It is important to understand, however, that just because someone is paying off part of their mortgage beyond the nominal retirement age of 65, it does not imply that they are experiencing payment problems.

“The overwhelming majority are paying off their loan successfully and fully in line with their mortgage commitments. For many of these borrowers, their monthly payments are modest relative to their incomes.”

Earlier this month, the Fos upheld a complaint against HSBC after the bank denied a couple in their 40s a mortgage on the grounds of age.

The unnamed couple was refused a loan of approximately £250,000 on their property on an interest-only basis for 18 years, because the man would be over 65 years old at the end of the proposed term.

The bank was ordered to pay the couple £500 and has been told to reconsider the loan application.

The decision came months after rival bank Santander unveiled plans to provide lifetime mortgages from this year, which would allow customers to repay the interest on their loan until they die, after which the bank would recover the outstanding balance by selling the deceased’s property.

Adviser view

David Sharples, a mortgage adviser at Search Mortgage Solutions in Manchester said: “Lending to older people is a contentious issue within the industry at the moment. However, as long as the borrower has a secure pensionable income that makes repayments affordable and this affordability is demonstrable, it is, in principle, a good idea.”