Brokers have hit out at banks for their stances on lending to older borrowers after new figures showed half of all building societies had maximum age limits of at least 80.
Last week Halifax announced it would use earned income for affordability up to age 70. Previously it applied this criterion up to state pension age, relying after that on pensions or other retirement income. However, the lender has not changed its maximum age of 75.
The move has thrust the lending-into-retirement issue back into the spotlight, especially as building societies seem to be making good progress in this area.
Halifax, HSBC, Nationwide, Santander and Virgin insist that the borrower repays their loan by the time they are 75. Barclays and RBS have a maximum age limit of 70.
But 22 building societies now lend up to 80 or 85, or have no age limit at all, with six having loosened their criteria in the past six months.
The Building Societies Association notes that 10 of its members do not have any age limits on lending and it says it is expecting more to ease their criteria this year.
While many believe Halifax’s move is positive, commentators stress banks in general are not doing enough to help older borrowers.
Your Mortgage Decisions co-owner Dominik Lipnicki says: “I don’t think [banks] are doing enough, and I’m actually really surprised why – especially when you’re sitting in front of a client who might have 20 or 25 years of impeccable payment history. This is not a risk. Times have changed but lenders haven’t changed enough. Any move by the Halifax or the big players should be welcomed, and I’m sure it will change. It’s just all too slow.”
L&C Mortgages associate director David Hollingworth says: “It’s a shame Halifax hasn’t taken the opportunity to push on a little bit. Unless things change with the major lenders, older borrowers will find themselves something of a niche.”
CML spokesman Bernard Clarke says: “We have been working to address regulatory, funding and market barriers that discourage all types of lenders from retirement borrowing.”