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BSA reviews mortgage lending age limits

The Building Societies Association (BSA) has committed to review its maximum age limits for mortgage borrowers to help those who need financing in retirement.

This is one of nine recommendations contained in an interim report entitled Lending into Retirement, launched yesterday.

The BSA said lender need to meet the challenge of growing life expectancy, which is rising by five hours every day.


There are already more than 11.6 million people over age 65 in the UK and it is estimated that by 2034 around a quarter of the population will be 65 or over.

Rising house prices, student debt, the divorce rate and abolition of the default retirement age means that more consumers are buying later with longer repayment terms.

BSA research shows that around half of 25-34 year olds think they will need a mortgage that lasts into retirement.

Among its other proposals, the BSA has pledged to work towards a mortgage which adapts to the different stages of a person’s life.

BSA head of mortgage policy Paul Broadhead said: “It is natural for the building society sector to kick-start and lead this work.

"We already tend to have a more flexible approach to lending with higher and sometimes no age limits and a willingness to assess applications considering an individual’s circumstances.

“As the average age of a first-time buyer continues to increase, borrowing into retirement is becoming increasingly commonplace, rather than a niche form of lending.”

Jeremy Duncombe, director, Legal & General Mortgage Club, said many upper age limits currently set by lenders are arbitrary and have not been reviewed for some time.

“This means they do not reflect the changing market, where older borrowers are now increasingly common.”

Legal & General’s research has found that while some lenders offer loans to borrowers until they are 85, some offer only until the age of 65, while others have no upper age limit at all.

Duncombe said this lack of consistency is confusing for consumers. “Borrowers should not be excluded purely based on their age, and should instead be assessed on whether they can demonstrate that they have the means to repay their mortgage.

“As life expectancy increases, many people will work until later in life, allowing them to service mortgage repayments well beyond their 60s.

“With the average life expectancy in the UK still rising, this is an issue that the industry can ignore no longer.”

Simon Chalk, equity release expert at Age Partnership, said the review was a positive step forward. "Currently, there is a real issue with older borrowers who can’t access the finance they need and as the population ages – and buys later – this is only going to affect more people.”


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