The FCA says it wants lenders to innovative so they will be more willing to lend to borrowers where the mortgage term extends into retirement.
Speaking at the Financial Services Expo in Manchester yesterday, FCA mortgage and mutual sector manager Lynda Blackwell said the reason why many of the bigger lenders do not lend beyond 75 years of age is that they rely heavily on automated systems.
She also said she understands that following the Chancellor’s Budget announcement on pension freedoms, it makes it harder for lenders to determine whether a borrower can afford a mortgage in retirement, as there is no certainty what their income may be.
But she added that the FCA would like to see more innovation in this area so more customers can borrow into retirement.
She said: “It would be quite nice to see some innovation and some products appear that would help get over this problem.”
The Mortgage Market Review, which came into effect on 26 April, does not prohibit lending into retirement but insists lenders ensure borrowers can afford their mortgage when they retire.