Later Life  

BSA turns on lenders over age limits after FCA criticism

BSA turns on lenders over age limits after FCA criticism

Mortgage policy chief at the trade body for some of the nation's biggest lenders has backed the Financial Conduct Authority over its claims some mortgage providers need to do more for older borrowers.

It follows the regulator’s publication of a paper on the ageing population identifying issues in the mortgage sector that could lead to poor consumer outcomes.

These include accusations of opaque and complex lending criteria, which may prevent older consumers from accessing a mortgage product, the limited appetite among some lenders for later life lending, and a lack of innovation.

Paul Broadhead, head of mortgage policy at the Building Societies Association, said the industry needed to do more to address changing demographics.

He said: “Building societies have been at the forefront of driving change in the provision of financial products for the needs of older consumers.

“Over the past couple of years, the number of societies offering mortgages that will extend into a borrower's 80s and beyond has almost doubled.

“But this market will continue to grow dramatically and as we have repeatedly argued, other lenders will need to follow suit.”

But a spokesperson for Lloyds Banking Group said it had already taken action in this area, raising the maximum lending age to 80 in 2016.

They added: “As the shape of the population and its working habits continue to evolve, we continually review our mortgage products and policies to ensure they reflect the needs of our customers, including those planning to work for longer and those already in retirement.”

Meanwhile a spokesperson for Yorkshire Building Society questioned whether lenders should be approving those who are above a certain age.

They said: “As a responsible mutual lender, we generally do not believe it is in the interests of a borrower to lend to applicants who will be older than 75 at the end of their mortgage term, but we can assess cases on an individual basis, including those from borrowers who will be older than 75 at the end of their mortgage term. 

“For applicants who are within 10 years of retirement, affordability will be assessed using both their current income and their projected retirement income to ensure that the repayments remain affordable once they have retired.

“We constantly look to improve our products and services to ensure they best meet our customers’ needs, but have no plans at present to change this policy.”

The FCA’s data found the total amount of mortgage debt held by over-65s is projected to almost double from £20.1bn to £39.9bn by 2030 as a result of people buying later in life.

In its report the FCA said the share of borrowers aged 65 or over is set to go from one in six currently to one in four by 2050.

Many people coming to the end of interest-only mortgages have been looking to equity release products, which are more accessible for older borrowers, as a means of repaying the loans.