As a society, we are living longer, witnessing higher house prices, facing a variety of loans and debts and are working very differently than in previous years. This means it is more difficult to qualify what retirement age refers to and why it’s often hard for lenders predict this when they are underwriting a mortgage. However, it is good to see that despite tighter lending criteria, more and more ‘non-standard’ borrowers, including those who are borrowing into retirement, are having their mortgage applications accepted.
It can be argued that as well as improved availability, the increase in lending is due to the regulatory sandbox which encourages building societies and banks to pilot new and innovative products that serve niche segments of the population.
It has been predicted that by 2020, a third of workers in the UK will be over the age of 50 and by 2050, almost a quarter of people will be aged 65 or over. In addition, an increasing number of older people are staying in homes for longer, which means supply to the market is less than it was a few years ago. In light of this, lenders are starting to respond to the changing needs of our ageing population and are looking for ways to enable older people to move and buy their last home.
In reality, although the majority of this group are looking to downsize which would help to free up the rest of the market, for others wanting to move up the property ladder, the lack of innovation has meant many are still struggling to get the finance they require.
Consequently, there has been a stagnation in the market as instructions are lower, which means lenders have to find a way to free up the top end of the market and lending into retirement is clearly the way forward. Although many have argued that the mortgage market has been relatively slow to respond to these fluctuating needs, this is changing and I am confident that more lenders will continue to adjust and compete.
The market will start to broaden out, provide greater support and the range of products will continue to expand in order to serve the growing number of non-standard borrowers. This will benefit UK mortgage borrowers as well as the broker market, and I expect approvals to remain on a steady upward trend this year.
