Mortgages  

Mutuals race ahead in older borrower coverage

Mutuals race ahead in older borrower coverage

More than half of Building Societies Association members will now lend to borrowers up to or beyond the age of 80, seven months after the body published its first report on the issues faced by older borrowers.

At its annual conference in Gateshead, the BSA launched a free consumer guide covering topics such as the link between pension freedoms and borrowing into retirement, affordability, equity release options and lifetime mortgages.

One of the interim report’s nine recommendations last November was a commitment to review maximum age limits on mortgages, reflecting a shift as the population grows older.

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The BSA stated 27 building societies, which hold £200bn of mortgage assets between them, will now lend up to 80 or 85 years, or have no maximum age limit.

Six societies will now lend up to age 80, with 10 societies lending up to 85 and a further 11 have no maximum age limit and manually underwrite each case.

  Building societies with no age limits:

Bath

Buckinghamshire

Cambridge

Cumberland

Dudley

Harpenden

Leek United

Loughborough

Monmouthshire

National Counties

Vernon

 

 

The BSA gave some examples, including the Cambridge Building Society, which since removing maximum age limits in January, has already agreed over 30 mortgages worth £4.5m, where the borrower will be over 75 at the end of the mortgage term.

Meanwhile, the Vernon Building Society offers a discounted rate on its Retirement Mortgage as an incentive for borrowers to register a lasting power of attorney, while its advisers are also required to hold the equity release advice qualification.

Paul Broadhead, head of mortgage policy at the BSA said he has seen innovation in the approach to underwriting and the development of processes better tailored to the specific circumstances of older borrowers.

“With the proportion of older borrowers only set to rise, this challenge must be faced by all lenders. Constructive work is underway across the market and I have high hopes for the current FCA project on the ageing population.”

Speaking at the conference, Dudley Building Society chief executive Jeremy Wood said: “We took an early decision to remove upper age limits across our whole product range and train our mortgage underwriters to better understand the needs of older borrowers.

“The demand for what we offer is significant and so far we have seen no increase in credit risk. In fact, many cases have been markedly better.

“I passionately believe that we ought to be shouting louder about our successes in meeting the needs of 21st century borrowers,” he added.

The Council of Mortgage Lenders has also called for more action to assist lending into retirement, responding to the regulator’s recent discussion paper on the ageing population by suggesting reforms to assist advisers in offering clients a range of at-retirement options that includes lifetime mortgages.

Adviser view

Mark Harris, chief executive of mortgage broker SPF Private Clients, said some of the smaller building societies have set the example for lending to older borrowers for a while now.

“While a number of bigger lenders are finally increasing the maximum age at which they are prepared to lend, thankfully the nimbler building societies have proven to be more forward-thinking and led the way.”