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Leeds BS tightens its lending into retirement criteria

Leeds Building Society has tightened its criteria when lending into retirement by reducing the maximum age a borrower can be at the end of their term from 80 to 75.

The lender’s mainstream mortgage range insists borrowers are no more than 75 years old when their term comes to an end.

However, until earlier this week it had a select range of products, called its “lending into retirement” range, which allowed a borrower to be up to 80 years old at the end of their mortgage term. This comes two years after Leeds reduced its maximum age from 85 to 80.

The pulled range includes a fees-assisted two-year fixed rate product, an offset two-year discount at 1.50 per cent as well as the offset variable rate mortgage.

Over the past 18 months a number of lenders have reduced the maximum age they will allow a borrower to be at the end of the mortgage term, with Skipton and Newcastle Building Society reducing their maximum ages to 75.

West Brom Building Society reduced their maximum age further, dropping by 10 years to 70 in May.

The upcoming Mortgage Market Review places greater emphasis on affordability, with the lender insisting lenders check a borrower can afford their repayments in retirement.

A spokesman from Leeds Building Society says: “We are constantly reviewing our mortgage range to ensure that it is appropriate for the market.”

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  • Anonymous 19th September 2013 at 12:46 pm

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  • Ian 19th September 2013 at 12:31 pm

    A spokesman from Leeds Building Society says: “We are constantly reviewing our mortgage range to ensure that it is appropriate for the market.”

    I guess this depends on how you define “the market.” If the word market is defined in the normal way, i.e. potential consumers of a product or service, this criteria amendment does the exact opposite of ensuring the mortgage range is appropriate for the market as it reduces consumer choice, despite there being no reduction in the availability of suitable advice.

    Therefore I assume either Leeds is getting too high a proportion of its business from mortgages where the borrower’s age at maturity is over 75, because of the small number of players in the sector of the market, or the word “market” is a euphemism for concerns about regulation.

    With this criteria change Leeds has merely come into line with most other lenders by removing one of its USPs but this move is further evidence of a conflict between what the MMR says, i.e. that lending into retirement, however one defines that these days, is acceptable, providing affordability can be adequately demonstrated, and what criteria the vast majority of mainstream lenders are actually currently applying to this sector of the market.

    Fortunately innovative products like the new Hodge Retirement Mortgage are helping to fill the gap left by mainstream lenders in meeting the affordable needs of older borrowers but it is notable that whilst pressing ahead with a second scheme to help the important First Time Buyer sector, and others only able to put down a small deposit, on the basis there is market failure in the 95% LTV market sector, The Chancellor appears not to have noticed there is even greater market failure in the market for older borrowers.

    It appears to have also escaped his notice that the “market failure” as far as high LTV lending is concerned is primarily due to the Basle 3 rules, which he supported. Does that mean that to address the “market failure” resulting from Basle 3 The Chancellor would now support changes in Basle 3 to make its capital requirements for high LTV lending less restrictive?

  • Ian Rose 19th September 2013 at 11:59 am

    “We are constantly reviewing our mortgage range to ensure that it is appropriate for the market.”

  • Ian Rose 19th September 2013 at 11:59 am

    “This is a comment with quotes”

  • Ian Rose 19th September 2013 at 11:59 am

    A spokesman from Leeds Building Society says: We are constantly reviewing our mortgage range to ensure that it is appropriate for the market.

  • Ian Rose 19th September 2013 at 11:56 am

    A spokesman from Leeds Building Society says: “We are constantly reviewing our mortgage range to ensure that it is appropriate for the market.”

    I guess this depends on how you define “the market.” If the word market is defined in the normal way, i.e. potential consumers of a product or service, this criteria amendment does the exact opposite of ensuring the mortgage range is appropriate for the market as it reduces consumer choice, despite there being no reduction in the availability of suitable advice.

    Therefore I assume either Leeds is getting too high a proportion of its business from mortgages where the borrower’s age at maturity is over 75, because of the small number of players in the sector of the market, or the word “market” is a euphemism for concerns about regulation.

    With this criteria change Leeds has merely come into line with most other lenders by removing one of its USPs but this move is further evidence of a conflict between what the MMR says, i.e. that lending into retirement, however one defines that these days, is acceptable, providing affordability can be adequately demonstrated, and what criteria the vast majority of mainstream lenders are actually currently applying to this sector of the market.

    Fortunately innovative products like the new Hodge Retirement Mortgage are helping to fill the gap left by mainstream lenders in meeting the affordable needs of older borrowers but it is notable that whilst pressing ahead with a second scheme to help the important First Time Buyer sector, and others only able to put down a small deposit, on the basis there is market failure in the 95% LTV market sector, The Chancellor appears not to have noticed there is even greater market failure in the market for older borrowers.

    It appears to have also escaped his notice that the “market failure” as far as high LTV lending is concerned is primarily due to the Basle 3 rules, which he supported. Does that mean that to address the “market failure” resulting from Basle 3 The Chancellor would now support changes in Basle 3 to make its capital requirements for high LTV lending less restrictive?

  • Stuart Duncan 19th September 2013 at 8:47 am

    It is the law of unintended consequences that someone with a huge pension is unable to obtain a mortgage. The FCA need to tell lenders to at least show some awareness of Age Disrimination legislation.