Large providers don’t want to take the time to look at older people on a case-by-case basis, Mark Bogard said this week, in response to questions by the Communities and Local Government select committee over the availability of housing for older people.
The chief executive said the big six lenders – referring to Barclays, HSBC, Lloyds, Natiowide Santander and RBS – were also wary of conduct and publicity issues in the sector.
Bogard claimed providers were worried about appearing in a national newspaper for “kicking a little old lady out of her home”.
He said: “The only way to deal with a mortgage for older people is by looking at them and being told a story.
“And if you’re one of the top six lenders you just can’t be bothered to do that, because for X per cent of the market it’s just not worth you doing it.”
Paul Smee, head of mortgages at UK Finance, told the committee he believes this is a position that will change over time.
He also said the regulatory attitude regarding lending to older people has relaxed in recent years, and pensions are a more accepted means of income for repayments.
Smee told MPs: “There’s no regulatory inhibition on taking the right people through into borrowing in later life.
“But it must be done on a case by case basis.”
Differences in equity release and mortgage advice
Millions of people who are on interest-only mortgages but can’t pay off the remaining capital face later life borrowing, Bogard said.
He told MPs in some cases, a lifetime mortgage will be appropriate but in some cases a normal mortgage would be better.
A big problem is that older people must get advice on equity release and residential mortgages from different places, Bogard said.
He added: “And one of the other problems… so there are some equity release advisers who can give you a normal mortgage – the commission payable on an equity release mortgage can be five times what it is on a normal mortgage.”
Smee said the equity release market is changing and merging closer with residential mortgages and there is significant regulation around the suitability of advice.
Bogard said equity release products are “very complicated and risky” from the lender’s perspective because of changes in interest rates and house prices, as well as the state of the property.
The committee also looked at the issue of specialist retirement properties.
Smee said there were lenders that would be prepared to look at offering mortgages for the homes, but wasn’t sure of numbers.
The Family Building Society won’t lend on the homes, because constraints over who the property can be sold to and high maintenance costs make it an unattractive asset to end up owning if things go wrong, Bogard told MPs.
Overall, mortgages for the over 60s and the equity release market are both growing, Smee said.