Older borrowers with secure incomes are being refused the mortgages they want and can afford by the big six lenders, according to a mystery shopper survey conducted on behalf of the Family Building Society. This was despite all the loan requests being acceptable to the Family Building Society.
In addition, the big six lenders are reluctant to deal with enquiries by phone preferring to steer applicants to an online application. Initially callers were told they had to fill in an Application In Principle form online before they could make a telephone enquiry but in most cases the call handlers were persuaded by the mystery shoppers to go through the form with the would-be applicant.
The requests were for a 10-year term for a mortgage with a five-year fixed rate, a two-year fixed rate or discounted for the first two years. However, all were rejected by Lloyds, NatWest, Barclays, HSBC, Santander and Nationwide.
Most requests were rejected on the grounds of age or only considered on a reduced mortgage term so the borrowing would end prior to the lenders’ upper age limit, significantly increasing the monthly payments.
Family Building Society Director of Marketing, Alistair Nimmo, said: “It is extraordinary that in today’s financial climate and the introduction of Consumer Duty which rightly has a focus on good customer outcomes, the major lenders are still discriminating against older borrowers purely because of their age. Many of the smaller building societies, including the Family Building Society offer mortgages to those coming up to and in retirement, if they can afford the contractual monthly payments.
“In our experience these borrowers, many of whom have solid pension pots, are much more secure than those of working age, who could be made redundant with little warning. Indeed, we will lend a new mortgage to a 90-year-old, but only if it is affordable.”
The following scenarios were used in the survey
Scenario 1
Husband 84, wife 67 both retired with pension incomes totalling a joint income of around 60k – pension and savings. Clients had previously lived in Kent, then moved to York, and now moving back to Kent to be near family. Previously unencumbered, now need a joint mortgage due to higher property prices in the Southeast. They require a 5 year fixed rate repayment product on a 10 year term. The mortgage amount is £85,000 and the property value is £518,000. The loan to value is 16.41%.
Scenario 2
A single woman aged 71 would like to remortgage her encumbered property- to gift to her mid-twenties’ granddaughter. Her income is from a pension and is 33k. She requires a 2 year discounted repayment mortgage product for a 10 year term. The mortgage amount is £84,000, property value of £330,000. The Loan to Value on this is 25.54%.
Scenario 3
Married couple aged 68 and 74, both retired, both have incomes from their pension totalling £59k. They are currently renting after moving back from abroad and want to purchase a property in the same area. Looking for an interest-only, 2 year fixed rate product for a 10 year term. The property is priced at £1million and the LTV is 10.50%. They would like to borrow £105,000.