Over 40's being frozen out of home loans

Graham_Devon

Home buyers over the age of 40 are increasingly being "frozen out" of mortgages , the industry is warning.

New rules mean that lenders are now restricting loans to anyone who will still be paying off their mortgage by the time they retire.
And yet many people cannot afford to buy a home until they are 40 or even 50, say some of the largest lenders.

Under a standard 25 year term, a 45 year-old borrower would be 70 before the loan was paid off.

So looking at this realisticly and bearing in mind we don't know the actual numbers, what can be done?

It appears were in a situation now where the younger can't afford the loans and once they can, they are increasingly becoming too old to pay them off before retirement age.

I think, or at least I'd like to think most of us will see the rules (i.e. not allowing mortgages to run past retirement age) as sensible on the whole. Obviously each case needs considering. But it does leave us with a stark problem.

Are the loans simply becoming too big? Too big to take on and too big to therefore pay off?

http://www.bbc.co.uk/news/business-30175365

MRMX9

Surely it depends on pension arrangements.

Some public sector workers with long service and generous final salary pension schemes - assuming they pay out - could easily finance a mortgage into their 70s or 80s.

Those relying on the state pension - obviously not!

Anyone now 45 should be assuming they will have to work until 70 anyway before they even get a state pension.

The answer of course is more housing and cheaper housing - which maybe is a pipe dream. Because if people don't own their homes how on earth are we going to fund the housing benefit bill for all these retired renters - or indeed pay for their social care if they have no property assets to sell to pay for them?

So its a problem for all of us.

Graham_Devon

MRMX9 wrote: »

Surely it depends on pension arrangements.

Some public sector workers with long service and generous final salary pension schemes - assuming they pay out - could easily finance a mortgage into their 70s or 80s.

Could the bold bit not be part of the problem?!

Agree with the build more housing, but there simply doesn't appear to be the appetite for any government to actually do this on a mass scale. Presumably because it *could* put all current loans at risk by lowering house prices across the board.

lisyloo

I'm 46 and I don't see why I should assume I'll have to work til 70 if I've made good private provision.
I won't get a state pension til 67 (or whenever they move it to) but if you save up enough yourself then you can retire when you like.
I'm not saying it's easy mind and those who do retire at a good age won't be those who've sat back and made assumptions, it'll be those who actively planned for themselves.

CLAPTON

Uk population is growing by about 400,000 per year

we aren't building enough to keep up with this increase although it all varies between the different regions.

until we bring the increase in demand and increase in supply more in line then house prices will continue to rise.

we need more supply and smaller increase in population

MRMX9

lisyloo wrote: »

I'm 46 and I don't see why I should assume I'll have to work til 70 if I've made good private provision.
I won't get a state pension til 67 (or whenever they move it to) but if you save up enough yourself then you can retire when you like.
I'm not saying it's easy mind and those who do retire at a good age won't be those who've sat back and made assumptions, it'll be those who actively planned for themselves.

Agreed.

But lots of people cannot or will not save.

If you believe some surveys - one in five adults (10 million people) do not have a penny in savings. I expect they don't have private pensions either in most cases.

And you need to save a lot in a private pension to generate enough income to live on.

So much money is having to go into rent and mortgage payments for many - they literally have little money left to save for the longer term.

http://www.confused.com/life-insurance/articles/rising-number-of-families-lack-rainy-day-savings

michaels

Graham_Devon wrote: »

So looking at this realisticly and bearing in mind we don't know the actual numbers, what can be done?

It appears were in a situation now where the younger can't afford the loans and once they can, they are increasingly becoming too old to pay them off before retirement age.

I think, or at least I'd like to think most of us will see the rules (i.e. not allowing mortgages to run past retirement age) as sensible on the whole. Obviously each case needs considering. But it does leave us with a stark problem.

Are the loans simply becoming too big? Too big to take on and too big to therefore pay off?

http://www.bbc.co.uk/news/business-30175365

Those pesky boomers again...hang on a minute.

As per Graham's analysis, the young can not afford to buy homes, the old can not afford to buy homes, QED all those home sales that are happening are a figment of my imagination - glad we have cleared that one up....

the_flying_pig

to be honest i'd be worried if banks weren't balking at making loans that went on until borrowers' late 60s & above.

i fairly recently took out a mortgage at, let me think, just 36, and very deliberately took it for 20 years only, even though it [unsurprisingly] made the p.a. payments a fair higher - i just wasn't sure i could count on my ability to keep paying mortgages into my 60s, especially with wage inflation being so persistently low.

calicocat

Me too.

Took on a new mortgage a couple of years ago at 46 over 15 years. No way was I wanting to pay for a mortgage after retirement and that's with a pension....not that i'll have it that long as will have got rid way before then.

wymondham

The problem is houses cost too much and hence mortgages are too large. These need to be reduced to sort the problem, but this is against Government policy ...

MRMX9

michaels wrote: »

Those pesky boomers again...hang on a minute.

As per Graham's analysis, the young can not afford to buy homes, the old can not afford to buy homes, QED all those home sales that are happening are a figment of my imagination - glad we have cleared that one up....

Interesting statistic here.

In just one decade the number of households renting rose 1.6 million to 8.3 million - almost entirely in private sector rentals. The proportion of owner occupiers fell from 69% to 64% and in London - where the housing benefit bill is highest - more than half of households now rent.

Yes - most people own their homes. But given that trend in just a decade that may not be the case for much longer!

The housing benefit bill for those renting retirees will be crippling in 20 years in London alone!

http://www.ons.gov.uk/ons/rel/census/2011-census-analysis/a-century-of-home-ownership-and-renting-in-england-and-wales/short-story-on-housing.html

"Over the decade to 2011, the number of owner occupied households in England and Wales remained more or less unchanged at about 15 million, while the number of households increased. This means that the overall proportion of owner occupier households fell by 5 percentage points to stand at 64%. The number of households who were renting went up 1.6 million to 8.3 million."