Over-50s struggle to secure loans because of strict new rules

Wednesday, 12/11/2014

Thousands of older property owners up and down the country are being turned away by banks when trying to secure better mortgages and instalment loans because of what has been described as a growing "computer says no" attitude among lenders.

Even those as young as fifty - no great shakes in this day and age, relatively speaking - are struggling to get lenders to commit to home loans. Financial watchdogs are claiming the crackdown is an unintended side-effect of stricter lending rules. As a result, they have come under fire from the the Financial Conduct Authority, who have levied accusations at lenders, claiming they are wilfully misinterpreting the rules in defiance of common sense.

Amidst claims that lenders are enforcing these new rules with undue harshness, the watchdog has vowed to "look much more closely" at the new strictures, known as the Mortgage Market Review, which came into effect back in April.

Under normal circumstances, most banks impose an upper age limit, usually between sixty-five and eighty, beyond which they will not commit to a loan. Recently, however, reports from people in their fifties being turned away by the banks are pouring in from all over the country, ostensibly because they would still be paying their mortgage into retirement.

Taking the podium at a recent conference hosted by the Council of Mortgage Lenders, the FCA's Linda Woodall claimed age should not mean an automatic bar. "There have been reports that older borrowers are finding it more difficult to get a mortgage and that this is partly down to our rules," she said. "But our rules do not aim to discourage lending to older consumers. Affordability is key. In fact the income of older borrowers such as pension income can be very stable." She finished by urging banks to "look more closely at their interpretation of the rules".

A spokesperson, commenting on behalf of the Council of Mortgage Lenders added: "Lending to older borrowers whose mortgages plan to extend into retirement may sometimes be perfectly appropriate. However, it has become more difficult for lenders to be sure that, at some future point, regulators will be satisfied that their lending was unequivocally appropriate at the time."

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