The report, by the Intermediary Mortgage Lenders Association (IMLA), looked at the impact of post-crisis mortgage regulation on the growing army of non-standard customers.
The trade body said a lack of clarity in the Mortgage Market Review (MMR) rules, has frozen out older borrowers.
Most private sector employees now hold defined contribution pensions which often prevent accurate predictions of pension income.
Lenders find it hard to determine how affordable a loan may prove to be beyond the point of retirement.
MMR stipulates mortgages must be affordable for the lifetime of the loan which has convinced many lenders that lending into retirement now carries extra risk if borrowers find at a later date that their retirement income disappoints.
Mortgage lenders have responded by imposing lower maximum age limits rather than risk future accusations of breaching the rules where customers’ pensions prove insufficient to keep up their repayments after they retire.
IMLA said the upcoming thematic review of the MMR by the Financial Conduct Authority, in the first half of 2015, must provide extra clarity so that lenders can offer the flexibility required to meet borrowers’ changing needs.
Peter Williams (pictured), executive director of IMLA, said: “This issue goes beyond the transitional arrangements for existing borrowers and means that efforts by the lending community to follow the spirit of MMR with new customers are being hampered by the very real concern that it may be cited against them in future.”
Williams said MMR has been a big step forwards but attention must now focus on honing the template so the pendulum doesn’t swing too far towards conservatism.
