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Lenders criticised for ‘meaningless’ age cap changes – analysis

  • 27/06/2019
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Lenders criticised for ‘meaningless’ age cap changes – analysis
Lenders have been accused of “making a big song and dance” about “meaningless” increases to maximum applicant ages.


This week Leeds Building Society announced it was hiking its maximum age cap for mortgage borrowers. As a result, it will now consider applications from borrowers who would be aged up to 85 at the end of their term for residential deals, while there is no maximum age at all for buy-to-let borrowers.

Matt Bartle, director of products at the mutual, said the lender kept its criteria and deals under “constant review” and was looking for new ways to help more people have the home they want.

Age caps are clearly an important consideration for some intermediaries, with ‘maximum age at end of term’ the most common search term when sourcing deals for both residential and second charge cases, according to the latest data from Knowledge Bank.


Making a big song and dance

But Jane King, mortgage and equity release adviser at Ash-Ridge Private Finance, argued that a lot of lenders were “making a big song and dance” about their maximum ages, yet when brokers try to place a case with them it is turned down.

This was typically because the borrower would not be able to carry out their occupation to age 85 or they cannot provide sufficient evidence of income in retirement, King suggested.

She added: “So in practice, unless you can afford the mortgage on retirement income alone after the age of 70 ‒ or 75 in some cases ‒ this maximum age is pretty meaningless. 

“It’s great for a few earners with good pensions, but for the vast majority it does not work and for older borrowers at outset retirement interest-only or lifetime mortgages are still the only option.”


Lenders need to look again at affordability and criteria

Stuart Powell, managing director of Ocean Mortgages, noted that residential lenders have seen the huge growth in later life lending ‒ particularly lifetime mortgages ‒ and so are looking to counter with innovations of their own, such as hiking the maximum borrower age cap.

Powell argued that the challenges brokers tend to face with older borrowers are usually around affordability rules and criteria rather than the term, and called for lenders who truly want to help those borrowing in later life to review these aspects as well.

He added: “Later life lending clients need to seek advice from brokers who can look at residential, retirement interest-only and lifetime mortgages to give them all available options.

“Residential-only brokers should consider working with lifetime mortgage brokers to offer this service to their clients if they cannot.”


No reason for a maximum age limit

James Mole, managing director of London Belgravia Wealth Management, suggested that it should be the norm for lenders to consider lending to borrowers into their 80s, arguing it was not “fair to force the older generation to exit the property market unless it is what they wish to do”.

He continued: “I just can’t understand the reason for a maximum age limit. I hope all lenders join the bandwagon.”

Mole added that there is now a “fairly decent” range of lenders to choose from for older borrowers, adding “what you find is there is normally another factor that makes finding a suitable lender a challenge” beyond the age alone.


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