MortgagesMay 10 2016

Banks refuse to up mortgage age limit

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Banks refuse to up mortgage age limit

Earlier this month, Nationwide pushed its mortgage age limit up from 75 to 85, giving the society the highest age threshold of any high street lender, and following in the footsteps of similar moves by smaller building societies.

Several equity release brokers and providers reacted to the move by suggesting rivals could follow suit, as industry calls grow for more to help for older borrowers.

But when asked if they would increase their own maximum age limit, several of the biggest high street names said they would stick with their existing policies.

At Barclays, mortgages must be repaid by the age of 70, or the customers’ retirement date, whichever is sooner.

A Barclays spokesman said: “The reason we placed the boundary at 70 is because we have an obligation to lend responsibly.”

“We will not lend beyond the age of 70 for the oldest borrower if there is a younger borrower who can cover affordability on their income alone.”

They added applications beyond a borrower’s 70th birthday can be considered on an exceptional basis, but the age limit exists because beyond it customers are more likely to face financial difficulty towards the end of their home loan’s term.

“The same is true if we look at retirement dates, so if a customer retires at 68, for instance, then in general we see that after this time their propensity to default increases greatly and so the responsible thing to do is limit our lending in these cases,” added the spokesman.

A HSBC spokesman said the lender does not decline mortgage applications due to age, but considers each application on its own merits.

“As a responsible lender, we need to make sure mortgages are affordable to customers across the term of their entire loan – that is why all of our residential mortgage applications that take a customer beyond the age of 75 are reviewed on a case-by-case basis.”

A spokesman for Santander said that as a “prudent lender,” it would continue to review its mortgage offering in line with customer needs.

“We are looking to introduce lifetime mortgages to specific interest-only maturity customers by the end of 2016, but have no plans to offer lifetime mortgages to new borrowers at this time,” added a spokeswoman.

A spokesperson for RBS said: “We regularly review our mortgage proposition and criteria to ensure it caters for our customers and their needs. We have no immediate plans to alter our maximum age of 70 for lending.”

However, there are some signs of a relaxation in the rules preferred by the big high street lenders.

Halifax Intermediaries has a maximum age of 75 at the end of the mortgage term. But from May, for all new applications, including mortgage, further advance and product transfers, it is increasing the maximum age at the end of the mortgage term to 80.

Any borrowing extending beyond retirement age will continue to require evidence of anticipated retirement income following the existing process.

Ian Wilson, head of sales at Halifax Intermediaries, said: “As demographics and working habits continue to change, evolving our lending policy will help us to meet the needs of those who choose to work longer.”

Industry view

Simon Gammon, managing partner at London-based Knight Frank Finance, added that with average life expectancy increasing in the UK, it is inevitable that banks will extend their mortgage age limits.

“The previous limits were becoming discriminatory towards people who are having to work longer – perhaps well into their 70s – but were refused mortgages due to their age.

“While this news will come as a relief for many, it will be more challenging for lenders, as it is of course riskier to lend to an older applicant – the banks will have less confidence in when they will see a return on their loan and will have to handle each individual case very carefully.”

peter.walker@ft.com