It is a sobering question to ask to be sure, but one that demands an answer. Recently there have been several news reports focusing on this very question, supported by a slowdown in the number of mortgages being offered in recent months.
Are Mortgage Market Review (MMR) rules to blame?
It would appear so. The rules came in back in April so they have been in place for a good few months now. Lenders have been far more cautious in who they accept for a mortgage, and this extends to people who are over 40 when they apply. A standard 25-year mortgage term means someone who is, say, 42 at the time of application will be 67 when the mortgage comes to an end. This means they will have retired – and this is the problem many lenders are faced with.
The uncertainty regarding the income of an individual beyond retirement age is leading ever-more cautious lenders to restrict borrowing to anyone who is beyond 40.
It can take years to be able to afford to buy a home in the first place
Yet this is just one side of the coin. The other, equally frustrating side of things is that it takes years for the majority of people to get into a position where they can afford to buy a property. House prices have on the whole continued to rise in many areas. The fact that many people are still on stagnant earnings with no real rise in sight makes it even more difficult for them to save for a deposit, let alone get into a position where they could apply for a mortgage.
Thus many people are approaching 40 – and often are over that age – before they can afford to even consider getting a mortgage. One can see this presents an impossibility for the would-be homeowner. They cannot afford a mortgage at the age where they would be considered for one. Yet when they finally get into a position where they can afford a mortgage, they have also very likely reached the age where no lender would consider them.
Banks and building societies take a stand
A two-dozen strong group of banks and building societies have however made their own dissatisfaction heard regarding this matter. This group includes major names such as Barclays and Nationwide, and they say the new MMR rules are hindering the number of people they can offer mortgages to.
The Financial Conduct Authority (FCA) is set to review the Mortgage Market Review rules next year. The group of banks and building societies are pushing for them to review this particular area of the rules which is preventing so many people from ever getting a mortgage. It is hoped – by lenders and applicants alike – that the situation will be amended so as to offer fresh hope to those who would like to eventually get into a position where they can get a mortgage. At present a significant proportion of people are clearly missing out.