Over half of estate agents say older borrowers “frozen out” by mortgage market
Posted 23 January 2017 by
Keith OsborneOver recent months, there has been much criticism of the way that major lenders deal with older borrowers. Many over-55s have found themselves trapped on high rates as lenders won't consider doing business with them, often for no other reason than their age.
Now, a new study has found that more than half of estate agents don't believe that the UK mortgage market caters for older borrowers.
58% of agents say the mortgage market does not cater for over-55s
New research has revealed that people over the age of 55 are being “frozen out” of new mortgages.
The study, by Key Partnerships, asked estate agents about the mortgage market for people over the age of 55. Most respondents reported that tougher lending criteria meant that many borrowers over the age of 55 were struggling to get a mortgage at all, while 58% of agents said the mortgage market didn't meet the needs of people over the age of 55.
Considering that two in five over-55s still have a mortgage of overdraft, millions of older people are finding it hard to borrow the money that they need.
The problems facing older borrowers
One of the major problems facing older borrowers is the difficulty in remortgaging. Many older people are stuck on their lender's standard variable rate - often much higher than the best rates available - because banks will not consider them for a remortgage based on their age.
With many lenders now having a maximum age of 70 or 75 it is tough for older borrowers to secure a mortgage over the number of years that they need. In addition, many lenders require borrowers to be able to prove their retirement income which can also be difficult.
The lack of mortgage options has also made it difficult for many over 55s to move. Even if an older borrowers requires a much smaller mortgage to downsize, lenders have been reluctant to grant home loans to older clients. This has been the case even if they can demonstrate a track record of paying a much higher mortgage.
The Key Partnerships study found these problems mean that two in five estate agents said the whole housing market was being damaged. Agents say that as older people are unable to move from the family home this is leaving a shortage of these properties for growing families.
Options for older borrowers
If you're an older borrower looking for a mortgage, there are steps you can take.
Speak to a mortgage broker for advice. While many High Street lenders have rigid maximum ages for home loans, some building societies and specialist lenders look at each application on its merits. A broker may be able to find a smaller lender that is happy to consider your application.
An alternative option is to consider equity release. While this approach has helped many thousands of borrowers, it is important that you understand the implications of such a scheme and how the interest is added to your loan during the term.