Thu 31 Jan 2019 View all news articles

Mortgages – why 80 is the new 60 as far as lenders are concerned


When the 2008 financial crisis hit, mortgage lenders attempted to reduce their exposure to risk, according to Moneyfact. Examples of this tightening of policy included reducing the number of interest-only repayment mortgages and lowering the maximum age allowed at the end of a mortgage term.

However, the financial comparison site and analyst said lenders appeared to be scaling back of some of the post-crisis restrictions. The latest research from Moneyfacts.co.uk revealed that the number of mortgages permitted to end when borrowers are aged between 80 and 84 years has increased from zero in 2014 to 1,078 products today.

Meanwhile, the number of mortgage deals that allow a borrower to be aged between 65 to 69 when it ends has reduced from 923 products in 2014 to just 18 today.

Darren Cook, Finance Expert at Moneyfacts.co.uk, said: “Over the past five years, mortgage providers have become far more accommodating to borrowers who wish, or may have no alternative but to extend their mortgage term well past the official pension age. The scaling back of strict criteria around the maximum age at the end of a mortgage must be a welcome relief for those borrowers who may have reached the end of their mortgage at 65 on an interest-only mortgage and have had few options available to turn to.”

The softening of the maximum mortgage end age appears to be widespread: In February 2014, 52% of all available mortgages were permitted to mature when the borrower was 75 years old and over, whereas today, this figure stands at 72%

The scrapping of the Default Retirement Age in 2011 now means that the official pension age and retirement age are no longer one and the same and employees can choose to work beyond the pension age for reasons other than financial need. Reasons to extend a mortgage past pension age may include releasing cash from their equity or purchasing a retirement property

Lenders are clearly reacting to this, even at the highest tier, with those who will be aged 85 or over at the end of a mortgage now having eight times as many deals to choose from than they did five years ago, rising from 33 products in February 2014, to 263 this month. “With this trend looking to continue as many of us retire later, older borrowers will welcome this extra choice,” added Darren.

Source: What Investment

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