A dramatic leap in mortgages for older borrowers reveals a shift in the demographics of people buying and paying off their homes, as building societies’ move to support later life lending.
Speaking at the Building Societies Association’s (BSA) annual lunch in London yesterday (15 November), chairman Jonathan Westhoff told attendees almost 60,000 mortgages set to mature when the borrower is 65 or older were written in the first half of 2017 - a 45 per cent increase on the same period in 2015.
He also said number of new mortgages due to mature when the borrower is between 79 and 84 has risen by 162 per cent between the first half of 2015 and the same time in 2017.
The number of building societies lending to older borrowers has risen from 18 in 2015 to 34 now, he added.
Mr Westhoff welcomed the Financial Conduct Authority’s announcement it would consider retirement interest-only mortgages, which do not involve the monthly roll-up of interest, as a solution for older borrowers.
Lending into retirement is gaining greater emphasis as people get on the housing ladder later in life, and as a means of helping people who have interest-only mortgages that are due to mature but who have not repaid the capital on their loans.
The BSA is also keen to support modern methods of construction and those working in the gig economy, Mr Westhoff said.
He added that building societies could contribute most to the use of off-site construction to ramp up supply, learning from the use of proven techniques in parts of northern Europe such as The Netherlands.
“These homes are strong, environmentally sustainable and cheap to run,” Mr Westhoff said. “People enjoy living in them. These must be built if housing supply is to increase.”
Mike Richards, director at London-based Mortgage Concepts Associates, commented: “At one point there was only normal high-street mortgages and lifetime mortgages. Now most lenders are putting something in place to cope with their own borrowers coming to the end of a scheme at 70 to 75.
“Most will agree a new mortgage for anyone up to the age of 80. While they won’t leave it open-ended, they will still consider mortgages for older borrowers. I think that is a very good thing and other lenders will follow suit, and a lot more will come into play.
“It means there is a bit more scope to deal with these people rather than saying you have to have a lifetime mortgage or equity release.”