‘Don’t blame us, it’s the MMR rules’, say lenders. ‘There is nothing in the MMR that says you can’t lend to older borrowers’, retort the FCA.
As objective researchers, it is not our place to add heat to this ‘ding-dong’, but our latest Mortgage Achilles study can shed some light. We asked a cross-section of 1,000 UK mortgage holders for their perception of how easy or difficult it would be to secure a new mortgage should they need one.
Around a third thought it would be ‘difficult’, the main reasons volunteered being ‘my income is too low’ or ‘my age, I’m too old’. Split by age group, the results show that the step change in expected difficulty comes at age 55.
Virtually no borrowers under the age of 45 expect their age to be a barrier to getting a new mortgage. Only 6% of borrowers aged 45-54 expect their age to be an issue (23% of the 25% in this age group think getting a mortgage would be difficult). Expectation that their age will be an issue is six times higher than those aged 45-54 amongst borrowers aged 55+ at 38% (62% in this age group expect difficulty).
These findings explain why rejecting applicants in their 40s or early 50s on age grounds creates such frustration or even anger. Consumers under the aged of 55 simply do not expect their age to be a barrier and they are astonished or even infuriated when told it is. An age-based rejection is likely to be considered much less contentious if the applicant is over the age of 55.
It is the consumer who suffers from this confusion about age and the MMR rules. It is surely incumbent on all involved to help. There could be more individual rules for people seeking to borrow beyond normal retirement age based on their likely future pension income. There also needs to be greater clarity about the new lending rules so that ‘older’ consumers (aged 40-54) are aware of any limitations before applying and aren’t left reeling when they do apply and don’t qualify.
Mortgage Achilles is BDRC’s annual deep dive study of behaviour and sentiment in the mortgage market. The Mortgage Holder Study was conducted in November 2014 among a representative sample of 1,000 UK mortgage holders.
Tony Wornell is a director at BDRC Continental