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Sally Laker: It’s time for lifestyle mortgages

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We need to move on from selling the plain vanilla mortgages we sold 20 years ago, with rate as the key differentiator

It appears that 60 is the new 50 and 50 is the new 40. In fact, there is an increasing population redefining non-retirement because of their aspirations.

This new Generation 50 has grown up in a world that says “You can have it all if you want it”, and it is prepared to work hard to get it.

The pressure will build as this demographic refuses to downsize to smaller homes, preferring to move sideways into properties to suit a lifestyle while still working and not worrying about anyone else.

But these people may want a mortgage too and, sadly, lenders are nervous of this territory. The risk is perceived to be higher when assessing affordability into later years. Indeed, despite the will to work until the age of 75, can this be guaranteed?

What if members of Generation 50 were to turn around and claim the lender surely knew there was a chance they might not be able to work until the age of 75? It could be seen as irresponsible lending.

And this is where things have to change if we are ever going to make mortgages work for people and their chosen lifestyles. As well as the regulator and lenders working together to agree on how far risk can allow – rather than prevent – innovation, there also needs to be a certain amount of customer accountability.

This should also involve the product providers. Surely it is time to move on from selling the plain vanilla mortgages we sold 20 years ago, with rate as the key differentiator.

Innovation is talked about frequently but it is about time we started to do something. The industry and the regulator need to work together and agree the risk parameters. Otherwise, in 20 years’ time, we could be selling the same mortgages we are now but with different pricing.

Sally Laker is managing director of Mortgage Intelligence 

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