12th November 2015
With the life expectancy of the UK population increasing by five hours a day, the building society sector has committed to review its maximum age limits for mortgage borrowers.
The news comes after lenders have come under growing criticism for failing to help older borrowers who require mortgages that stretch into retirement.
This action is one of nine recommendations contained in an interim report entitled Lending into Retirement, launched today at the BSA Annual Lunch. The BSA says it is responding to major societal shift as our population ages and needs increasingly to fund mortgage borrowing into retirement.
The UK already has 11.6 million people over the age of 65. By 2034 it is estimated that around a quarter of the population will be 65 plus.
At the same time, the BSA says, a potent mix of other factors: From house prices to student debt; the divorce rate to the abolition of the default retirement age, mean that consumers are tending to buy later and go for longer repayment terms.
BSA research shows that around half of 25-34 year olds think they will need a mortgage that lasts into retirement, while the average age of an unassisted first time buyer has already hit 31.
Further recommendations include:
BSA head of mortgage policy, Paul Broadhead says: “It is natural for the building society sector to kick-start and lead this work. We already tend to have a more flexible approach to lending with higher and sometimes no age limits and a willingness to assess applications considering an individual’s circumstances.
“As the average age of a first-time buyer continues to increase, borrowing into retirement is becoming increasingly commonplace, rather than a niche form of lending. This report identifies a number of areas that need further attention if we are going to meet the inevitable growth in demand for borrowing into, and in, retirement. The time is right to review lending policies, examine how advice is provided and to work closely with a range of organisations across different sectors to ensure that lenders are equipped with the appropriate tools to respond to the rapidly changing demographics across the UK.”