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Underwriting must become more flexible to deal with older borrowers – Cleary

by: Alan Cleary, group managing director for Precise Mortgages
  • 17/10/2019
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It’s no secret that the UK’s population is ageing. According to Age UK’s latest factsheet, there are nearly 12 million people aged 65 and above.


In 50 years there will be an additional 8.6 million people aged 65 and over – a number roughly the size of London’s population.

This demographic change will have a huge impact on our country, not least putting a strain on the National Health Service and state pension provision.

It also has implications for how we live and house ourselves, particularly, how we fund our homes and whether or when we use capital accumulated in those homes to supplement our retirement income later in life.


Living longer, working longer

And not only are we living longer, we’re working for longer too. Gone are the days of working five days a week for 45-plus years and retiring in your sixties with a gold-plated pension and a carriage clock.

The number of over 70s in full or part-time work has been steadily rising year-on-year over the past decade.

Today, nearly one in 12 of those in their 70s are still working, a significant increase from the one in 22 there were 10 years ago, according to Rest Less.

There are a myriad of reasons why people are working for longer – to keep active, maintain social connections, supplement their incomes or top up their pensions.

Whatever the reason, these changing demographics are not just having an effect in the workplace, they’re also causing changes in the lending market.

The later life lending market for borrowers aged 55 and over is seeing the strongest growth rate and is becoming an increasingly important part of the market.

UK Finance figures show the sector grew by nearly 14 per cent last year, with more demand from older borrowers for residential mortgages, as well as equity release products.


Lenders have a responsibility

So what can lenders do to meet their increasing demand and ensure older borrowers can access the products and criteria which reflect their changing needs?

I’ve been encouraged to see maximum age restrictions being extended, but I’d like to see more lenders investigating later-life lending options.

With people needing to borrow against their homes for longer, health is likely to become more of a factor in affordability assessments over the longer term as a result of an ageing customer profile. Underwriting approaches will have to develop too, becoming more flexible to allow for changing income profiles and joint income assessments for couples nearing retirement and/or care.

As lenders, there’s obviously a commercial incentive of meeting the needs of a changing marketplace, but there are also the social implications for millions of people if we fail to develop our products and criteria in line with the changing profile of borrowers.

It’s up to us all to make sure we’re offering products which are attuned to the realities of our ageing population.



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