When you're approaching later life there's always the hope that mortgages will become cheaper, as years of making repayments brings down the overall balance and, ideally, the cost. Unfortunately, it doesn't always pan out that way, as research from Saga has revealed that older homeowners are actually being charged more for mortgages, while some find it difficult to source deals at all.
According to a Saga Personal Finance poll, a large number of those aged 50+ are concerned about the behaviour of mortgage lenders, with many providers introducing arbitrary upper age limits on lending criteria and even placing a ban on older borrowers getting a better deal. In fact, 12% of those in their 50s said they've been refused a better mortgage rate or were unable to move to a more competitive deal simply because of their age, so it seems that these concerns could well be realities.
The findings come despite the fact that working life is becoming longer for many people, not only because of the rising state pension age and the abolition of firms being able to set compulsory retirement ages, but also because many simply want to continue working in later life. This means a lot of homeowners will have a secure income with which to make mortgage repayments well into their 60s and beyond, so lenders could be penalising older borrowers unnecessarily.
The survey revealed that an overwhelming majority (85%) thought that lending criteria should be based on ability to pay, taking into account individual income and lifestyle choices – as it is for younger borrowers – and not just on a person's age, and a further 52% thought the industry regulator should intervene to ensure fair treatment.
"It appears that mortgage lenders are blind to the fact that the world of work is changing," said Paul Green of Saga. "It simply beggars belief that people are being denied mortgages or forced to pay more for uncompetitive deals simply because of their age. This smacks of lazy lending and not bothering to understand your customers, and is another example of the industry not responding to the needs of an aging population."
Saga is joining the call for the regulator to take a proactive stance with mortgage lenders to ensure that lending criteria is fair and based on more than just age – lenders may be under more pressure to ensure affordability since the Mortgage Market Review was introduced last year, but ability to pay doesn't end as soon as a borrower is in their 60s.
Happily, it seems that the tide could be turning – earlier this month, the Financial Ombudsman Service upheld a complaint against HSBC for refusing a mortgage to a couple in their 40s on the grounds that the husband would have been over 65 at the end of the term. It's the first time this kind of age-related complaint has been upheld, with the lender being criticised for "unfair" application of its age policy, and it's hoped that this landmark decision will pave the way for future changes and acceptance of borrowing in older age.
Compare the best mortgage rates
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
Moneyfacts.co.uk will, like most other websites, place cookies onto your computer’s
hard drive. This includes tracking cookies.