Analysis: ‘Grey borrower’ power is set to grow


It seems ironic that, at a time when the traditional notion of a ‘retirement age’ has changed considerably with many people choosing (or having) to work beyond 65, those aged just 55 can freely access their pension pots.

Perhaps the developments herald far-reaching changes about what retirement age means, what is appropriate and responsible lending to this age group and how other products, such as equity release, can fit into planning.

There appear to be two, perhaps interlinked, mortgage areas that are likely to show continued strength: buy-to-let and lending into retirement. A number of big lenders’ product development teams have been considering this issue for some time – not surprising given their concerns about the scale of interest-only loans held by their borrowers, many of whom have not addressed the issue of repayment.

Lenders are reacting to demographic and societal changes around lending to older customers and they understand that the power (and demand) wielded by the ‘grey borrower’ is likely only to increase.

So advisers are in a perfect place to support and develop older-client relationships to a point where they are the first natural port of call for perhaps a new generation of property-savvy retirees.



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  • Carl McGovern 15th May 2015 at 12:20 pm

    Hi Matthew, I have read the article now, so thanks for pasting it. I have to say it is a very interesting read and would hope the lenders sit up and take notice. So far they don’t appear to have, but I guess it’s early days.

  • Matthew Speck 14th May 2015 at 8:25 am

    Carl, you are right, a major hurdle to lending in retirement could be lenders themselves. An unhelpful side effect to new regulation can be firms over-reacting to it. This might be the case with some lenders since MMR.

    The FCA rules allow a reasonable amount of flexibility to lending in retirement which means if the customer is really able to afford the payments then it shouldn’t be a problem.

    Here is a speech made by the FCA in November where they comment on older borrowers finding it difficult to get a mortgage:

  • Carl McGovern 13th May 2015 at 4:39 pm

    Right now, it is almost impossible to place a Mortgage for someone beyond the age of 75. I constantly ask myself why is this? At the risk of repeating myself, a couple age 64 and 50 have recently approached me and wanted to transact their Mortgage over a 20 year term. I could not place this case in joint names with a single high street lender, despite the younger applicant having sufficient income in her own name, to validate this Mortgage.

    The fact that the lenders are now reacting to these issues is music to my ears as I would welcome a more sensible approach to lending to older clients. Bring it on, the sooner the better.

  • Chris Hulme 13th May 2015 at 3:18 pm

    If only lenders DID understand Bob. We’re still asked for pension evidence 20 years away from a term that goes into a perceived retirement by a few years or so…. The grey borrower may become more prevalent but underwriting for older ages needs to evolve far beyond its caveman ability of today.


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