MSE News: People over 40 'denied mortgages'

crittertog

getmore4less wrote: »

THey are only being denied what they can't afford(by the ruules).

Except, they're not (according to the FCA).

BBC Radio 4 (Moneybox) did a bit on mortgages for "older" people (those whose loan term would extend past the state pension age), finding that people were being denied on affordability grounds, primarily due to the lenders refusing to take their pension into account, citing the unpredictability of pension income (even in the case of state-backed final-salary schemes). According to man from the FCA, this is the "least effort" reading of the rules, and should the affordability criteria be failed, the lenders should then be applying a "common sense"/"individual circumstances" check.

Thrugelmir

amnblog wrote: »

That is not the culture in this country today Thrug.

There lies the quandary.

Culture evolves over time. As people will have to adapt to the rules. Whatever the ins and outs the direction of travel is set.

Loads of fuss when the smoking banned was first introduced.......

Thrugelmir

MacMickster wrote: »

Financial planning and responsibility? Having to convince the bank manager that you are a good risk for a loan?

I think that you're still living in the 1960s - and hopefully the future again.

No need. The advent of technology has meant that far more data is available than ever both. Which enables to people to be fully assessed. People have little option but to conform. As the computer will say no. No if's and but's.

Bank managers used to have discretion. Something which is sorely missed today.

Don't forget that the benefits of this though. Such as more competitive products and a wider choice.

Thrugelmir

martin1959 wrote: »

What the banks seem to forget, is that people are grown up, and most are capable of making reasonable decisions.

Then you've never worked in finance. As that's a very blue sky view. Unfortunately there are people that don't manage their finances well. The cost of servicing this element is extremely high. People would soon complain if mortgage rates were lifted by 1% - 2% to cover the cost the defaulters.

Thrugelmir

martin1959 wrote: »

2. You used to be able to get retirement mortgages where the loan was conducted on an interest only basis. For example, someone aged 50 takes a 100k mortgage on a £150k property over 25 years with a monthly payment (estimated) £900 per month which they can afford while working. When they retire, the property will be worth (estimated) £200k and the o/s mortgage will be about £40k (estimated). At this point the lender switches the loan to interest only (Retirement Mortgage)with a monthly payment of £140 (considerably less than rent) which can be paid from pension. The property continues to rise in value and when the property is sold the loan is o/s loan is repaid.


This was a popular scheme until it was ditched a couple of years ago.

And NRAM still has around 500,000 mortgages representing about 6% of total UK outstanding mortgage lending. The UK taxpayer is far from off the hook for the poor lending decisions of the past.

Lenders cannot base policy on house price rises. BOE is more likely to ask them to factor in 35% falls when performing balance sheet stress tests.

Interest only mortgages require funding. The money supply is being contracted as banks balance sheets reduce in size. Leveraging with debt isn't the way to riches.

TrixA

My partner is 49 and we have just taken out a 20 year mortgage with HSBC. All he had to do was to obtain a declaration from his employer that they wouldn't require him to retire before the term of the mortgage was up.

vm2pensioner

This all seems yet another example of quasi-governmental well-intentioned but ultimately mis-targeted interference, which leaves banks and building societies able to interpret the guidance inconsistently, deny older borrowers the ability to move to appropriate lower-cost mortgages - even though they can well afford the existing loan - and ultimately makes the situation worse for many borrowers.

movilogo

All he had to do was to obtain a declaration from his employer that they wouldn't require him to retire before the term of the mortgage was up.

Those statements are not worth the paper. Employer may not force to retire but can make redundant!

shortchanged_2

Maybe the banks are being proactive for a change and don't fancy a whole new raft of mis-selling claims in the future.

You can just see the headlines 'my bank sold me a mortgage until I was 70 now I can no longer afford it. Am I entitled to compo?'

Thrugelmir

shortchanged wrote: »

You can just see the headlines 'my bank sold me a mortgage until I was 70 now I can no longer afford it. Am I entitled to compo?'

This situation exists with the interest only mortgages already in place that run into peoples retirement years. In many ways the horse has bolted. Particularly with the number of people proposing to downsize. Who'll be competing with new buyers and BTL'ers. Few bumps in the road yet.