As little as four years ago, many mortgage providers were reluctant to lend into retirement, meaning that many buyers aged 50 and beyond struggled to secure the loan they needed. Fast forward to 2020 and there are over 60 lenders offering later life products for older borrowers (RIO and later life combined), contradicting consumer research from Ipswich Building Society*, which highlights ongoing perceptions of unfair treatment in the mortgage market.
Research from Ipswich Building Society shows that:
- More than half (57 per cent) of over 50s borrowers say they have fewer mortgage providers available to them compared to younger mortgage applicants
- 60 per cent say they feel that there are fewer mortgage products available to them and
- 44% say they are offered less favourable rates
Richard Norrington, CEO at Ipswich Building Society, commented on the findings: “The mortgage landscape for over 50s looks entirely different now compared to just a few years ago but as our research shows, that doesn’t necessarily mean people’s perceptions have kept up. Too many borrowers are still pleasantly surprised that they can get a mortgage after a certain age, rather than expecting this to be the norm.”
One in ten of today’s mortgage holders do not anticipate being mortgage-free until at least the age of 70, but a recent (10 February 2020) Office of National Statistics report Living longer: changes in housing tenure over time** indicates that the number of older people in rental accommodation is likely to rise as people in their 30s and 40s are not able to get on to the property ladder at all. However the report also notes that amongst other factors, ‘mortgage lender policies including mortgages for older people and lifetime mortgages’ have the potential to affect housing tenure in the future.
Commenting on the ONS report, Richard Norrington said: "Mortgages for older borrowers are still in their infancy, with awareness of these new products still fairly low. Borrowing in later life is not suitable for everyone's circumstances but with more providers lending to more people, the full impact of later life lending could be profound."
Income in later years
While some people may not have a choice but to work into their later years, others make an active decision to do so – sometimes well into their eighth decade. This shows that later life and retirement are not necessarily one and the same. Either way, whether working or retired, both may have a steady income meaning they could actually represent a good risk for lenders.
And for those who do take early retirement, pensionable income is in fact one of the most reliable forms of income that a mortgage provider could take into consideration.
Richard Norrington concluded: “Older borrowers have complex needs, and are not all simply ‘downsizers’. Although some are looking for smaller, easy-to-manage properties near to amenities now their children have flown the nest, being older doesn’t mean they stop striving for more, which could mean retiring to an idyllic country cottage, buying a second property, or even remortgaging to help a younger member of the family take their first step onto the property ladder themselves.
“Ipswich Building Society believes that the growth in both choice and access for older borrowers shows lending to over 50s is becoming the new normal.“
About Ipswich Building Society’s Later Life lending programme
All of Ipswich Building Society’s mortgage products are available with no upper age limit and there are also a number of specialist later life deals which can be selected if more suited to borrower requirements. The Society will also accept 100 per cent of a borrower’s pension as well as a proportion of other forms of income, such as investments, when addressing affordability. The Society also applies a manual approach to underwriting, meaning that real people review applications on a case by case basis, taking personal circumstances into account.
*Research was undertaken by Walnut Research on behalf of Ipswich Building Society during February 2019 amongst 2,019 UK adults aged 18+.
** Living longer: changes in housing tenure over time – https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/ageing/articles/livinglonger/changesinhousingtenureovertime