West Brom Backs Lending into Retirement Report

Building societies commit to review maximum age limits on mortgages as the population lives longer.

The West Brom is backing a building societies review looking for ways to better support people who need mortgage finance into and during retirement.

The Society is part of a working group led by the Building Societies Association (BSA) which has published an interim report entitled Lending into Retirement.

Among the report’s recommendations is a sector-wide commitment to review maximum age limits for mortgage borrowers.

The review is in response to people living longer and increasingly needing to fund mortgage borrowing into retirement.

James Wright, Divisional Director for the West Brom, said: “We’re very happy to be contributing to a review of what is a growing issue and, with the other members of the working group, coming up with suggestions for how the sector could collectively make a difference.

“As a regional building society with a significant local branch network, we get regular feedback from staff and are very aware from their conversations with borrowers that there is a societal shift around home buying and people’s needs are changing.”

The West Brom’s upper age limit for borrowers at the end of their mortgage term is, at 70, already beyond retirement age.

However, said James: “We firmly believe you should treat people as individuals, look at their particular circumstances and endeavour to help where possible.

“There is room for flexibility and we are already open to lending beyond 70 providing the applicant meets the necessary affordability criteria, just in the same way any borrower needs to when taking out a mortgage.”

The report was released at the Annual Lunch of the BSA, the sector’s trade body which is coordinating the working group of 30 building societies, including the West Brom, to discuss the issue of lending to older borrowers and propose potential solutions.

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.”

There are 11.6 million people in the UK over the age of 65, with life expectancy for the population as a whole increasing by five hours a day*.

By 2034 it is estimated that around a quarter of the population will be 65-plus.  At the same time consumers are tending to buy homes later and go for longer repayment terms.

This is being driven by a mix of factors, including rising house prices, student debt, the divorce rate and the abolition of the default retirement age.

Research by the BSA shows that around half of 25 to 34 year olds think they will need a mortgage that lasts into retirement, while the average age of an unassisted first time buyer has reached 31.

Dick Jenkins, Chair of the BSA, said: “We have been working together as a sector to look at this issue and we are making some early recommendations for change today.  Some put the ball firmly in our court; others can only be delivered in partnership and a few may require regulatory change.

“The FCA has been involved in this preparatory work and I’ve been impressed with their open-minded and participatory approach.  We have also sought the views of many others and these will now contribute to the next stage of the project, to deliver progress for those who want, need and deserve to buy a home of their own into and in retirement.”

The other eight recommendations in Lending into Retirement cover a range of areas:

  • The availability of suitable housing options for older homeowners who want to move to a property that meets their changing needs – making it an aspiration not a chore.
  • Better cross-departmental coordination to rationalise Government policy on the treatment of older borrowers’ housing wealth.
  • Delivery of regulation that encourages innovation.
  • The provision of clear information that empowers older consumers.
  • Working with insurers to develop policies that enable lenders to mitigate the different risks involved in lending to older borrowers.
  • Improving the availability of holistic financial planning in retirement.
  • The formation of a cross-industry alliance with other bodies focused on the needs of older consumers.
  • Working towards a mortgage which adapts to the different stages of a person’s life.

The BSA’s Lending in Retirement report can be found here.

*Five hours a day: systemic innovation for an ageing population, Nesta, 2013.

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