Building societies to look at age limits after review

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Building societies to look at age limits after review

The building society sector has committed to reviewing its maximum age policy as more people expect to be paying off their mortgage into retirement.

Building societies have said they will look at their maximum age policies to make sure they are still set at an appropriate level.

A 24-page report by the Building Societies Association said that increasing house prices and changing demographics meant people were buying houses later in life and needed to borrow for longer.

The average age of an unassisted first-time buyer was 31 in 2014, while one in four people today who will borrow beyond the age of 65 is a first-time buyer.

Dick Jenkins, chairman of the BSA, said: “We have been working together as a sector to look at this issue and we are making some early recommendations for change today.

“The FCA has been involved in this preparatory work, and I have been impressed with its open-minded and participatory approach.

“We have sought the views of many others and these will contribute to the next stage of the project, to deliver progress for those who want, need and deserve to buy a home of their own into and in retirement.”

Key facts

According to the Office for National Statistics projections, almost a quarter of the population will be aged 65 and over by 2034.

At the end of 2014, lending to borrowers who will be older than 65 when they repay their mortgage accounted for 35 per cent of total lending.

Real house prices have more than doubled in 20 years from an average of £88,944 in Q3 1995 to £195,733 in Q3 2015, while since the late 1990s, average first-time buyer deposits have increased around five times from £10,000 to almost £50,000.

In the decade between 2003 and 2013/14 owner-occupation in England declined from 71 per cent to 63 per cent, whereas private rental has steadily increased.

The BSA has also committed to publishing a consumer guide aimed at older borrowers, including information on maximum age policies, inheritance and equity release.

It has also begun discussions with the insurance industry on how to mitigate age-related risks.

The CML is expected to publish a review on lending into retirement later this month. At its conference on 10 November, its chairman, Moray McDonald, said that between the new rules from Europe and those implemented by the UK regulator, lenders were still having to devote resources to regulation rather than better servicing customers.

Referring to the regulation, he said: “Never has so much been done for the benefit of so few people”.

Industry view

David Copland, director of national mortgage club TMA, said: “The cost of homes is raising the age of the first-time buyer, which may make it more difficult for them to buy if they reach their forties and there continues to be little or no lending into retirement.”