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Brokers hit out at banks over lending into retirement policies


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.”



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  • Carl McGovern 4th May 2016 at 2:59 pm

    I accept that a term ending at a clients expected retirement is sensible as a drop in income invariably occurs. What I can’t understand is why a lender will not accept an application from a client who is already retired and has good pension Income, beyond a certain age. Smaller local lenders are at the forefront in this area, with the likes of the Chorley and National Counties, to name two, who have no maximum age at expiry. Although both of these lenders, so employ other criteria, than can sometimes prove to be problematic, I loudly applaud them for their initiative.

    It is about time that other, larger lenders followed their example and gave the older generation more choice.

  • Chris Hulme 27th April 2016 at 12:15 pm

    There is a chasm between lending to normal/ state retirement ages and lifetime mortgages.

    The issue isn’t just with lenders looking to lend to ages at which clients can reasonable expect to work in their chosen profession, it is also a lack of product/ criteria development for those clients between “earned income” assessment and lifetime mortgages.

    This gap seemed to have been filled quite neatly in the past with the Halifax Retirement mortgage which was essentially an open ended interest only mortgage. Given a choice of that or lifetime mortgages, there are a number of borrowers who would comfortably fit affordability on former.

    Well done to the lenders taking this seriously and looking at the real world. Lending to older ages using earned income is part of the story but isn’t all that needs to be done.