Pensions minister Steve Webb has asked mortgage lenders for evidence on whether paying into a pension makes a borrower a better credit risk.
Webb met the Council of Mortgage Lenders and Association of Mortgage Intermediaries in December after Mortgage Strategy’s sister title, Money Marketing, reported that some lenders take pension contributions into account when assessing affordability while others do not.
Brokers said this is pushing them to consider advising borrowers to stop their pension contributions. Webb later wrote to the CML and Ami to express concerns about the practice.
At the meeting, Webb asked lenders to investigate whether there is any evidence that pension savers are less likely to default on their mortgage, and whether this could be taken into account in lending decisions.
Webb said: “I remain of the view that choosing to save for a pension is a mark of financial responsibility and I would like to see the mortgage industry make efforts to better acknowledge this in their policies.
“On my suggestion, CML and Ami have agreed to consider this issue and I hope, in due course, it will be possible to identify data that would enable lenders to take such evidence of financial responsibility into consideration.”