In recent years it has been very difficult for someone of advanced years to get a mortgage. Indeed, we have heard stories about people in their fifties and older (and even sometimes in their forties) being denied a mortgage because of their age.
However, that may soon be changing if recent news reports come to fruition. According to press reports, more than two dozen building societies are looking into adjusting the current age limit in place for mortgage borrowers.
Why is this being considered?
There are two main reasons why lenders are considering this move. Firstly, there is the very real problem of rising house prices. They have been rising far faster than earnings for some time now. This makes it more difficult for anyone to get a mortgage with a term that is acceptable to them. It takes longer to save up for the required deposit, and that means there is a much shorter period of time available between buying a property and the retirement date of the applicant.
Secondly, people are living longer. This also has a bearing on how long a person might be able to pay off their mortgage for. Of course, they must have plans in place to continue paying the mortgage after they retire, if this is what will happen. Yet it does show how important it is to review the current situation, so that more people may be considered for a mortgage they would previously have been turned down for.
Is this practical, given the Mortgage Market Review rules that came into force last year?
You may think the relaxation of rules to appeal to older borrowers may fly in the face of the MMR rules that were brought in during April 2014. However, this is not necessarily the case. The rules are based around the assessment of risk. If an older person is considered a very low risk, even though they are in their early fifties, they should be able to get the mortgage they want. Being rejected purely because they cannot tick a particular age box on the application form is seen as frustrating and disappointing by those in this position at present.
We should be encouraged then by the agreement to look into the current situation. The Building Societies Association (BSA) has created a report that focuses on specific areas that must be considered if older borrowers are to receive the funds they need by way of a mortgage.
With more than 11 million people in the UK who are aged over 65, it is clear there are currently many people who are being locked out of this market. While the MMR rules have a clear role to play in minimising the risks associated with mortgages of all kinds, locking out older people altogether is not a smart move. Perhaps this consideration of age limits will help many older people get access to the mortgages they want – long into their retirement years.