Repossession rates for borrowers aged over 60 at the time of origination were 28% lower than those for younger borrowers, the study found. However, three-month arrears rates were 1.2 times higher for the older group.
Higher employment for over 50s was the main reason offered for the lower arrears, the credit rating agency suggested: “In addition to a more buoyant employment market, this lower repossession rate may be due to (1) older borrowers having more assets that they are able to sell; or (2) lenders’ reluctance to repossess should payment problems be connected to ill health.”
The slightly higher arrears could be attributed to an inability to work, older borrowers’ exposure to high inflation and energy price rises, and the poor rates on annuities and savings deposits.
Highclere Financial partner Alan Lakey said an older person was likely to have a lower loan-to-value mortgage: “They have more equity in the property and therefore the lender will be that much more comfortable knowing the equity will remain there.”
“Courts are also very loathe to agree a repossession under all but the most extreme circumstances. An older person is likely to be able to argue their case in a more refined manner.”
Equally, borrowers with an LTV of at least 80% had an arrears rate of over seven times and a repossession rate of over 14 times that of loans below that level, Moody’s reported.
Mortgage arrears overall will marginally fall in 2013, the credit rating agency predicted, with single and lower income households, first-time buyers and self-employed borrowers facing more payment difficulties because of the squeeze on benefits and declining affordability.
