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BSA rejects possibility of restricting pension freedom access to older borrowers
Lenders should treat older borrowers in the same way as younger people when underwriting mortgages, the Building Societies Association (BSA) has said.
When questioned on whether mutuals would ever consider putting restrictions on accessing pension pots to older borrowers, BSA head of mortgage policy Paul Broadhead said this would go against government policy.
“The way I look at pension freedoms, people tend to be pretty conservative about what they do, the more pertinent question is how do people manage the deccumulation phase in their life and how do we assess that as mortgage lenders in terms of repayments?” he told the BSA conference.
“I think the minute that mortgage lenders start to implement conditions on the mortgage about what you can and can’t do with your pension it flies straight in the face of government policy.”
The discussion came as part of a session on the growing numbers of people borrowing into laterlife.
Broadhead added: “If we’re worrying about pension freedoms that people are going to draw all their pot down, we don’t tend to worry at the other end of the spectrum about first-time buyers blowing £6,000 or £7,000 on a credit card furnishing their home.
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“We need to trust that these people will make the right decisions. When you underwrite a mortgage you can only underwrite on what’s in front of you.”