Ageism in mortgage applications

dunstonh

A1jockey said:

Update: I have received a response from the Govt Minister responsible who states that if the practice and process is triggered by age, without a clear reference to ability to pay, it is both against the spirit of the legislation and may well deemed to be unlawful discrimination.  

Which Government minister said that?
Did you present the minister with a balanced scenario or biased scenario?

This relates to a secured loan and there risk to the organisation is reduced as the house is the security.

security has no impact on the affordability criteria.

 I have questioned the FCA and the Prudential Authority, both have failed to respond.

As they should.

This is discrimination based solely on age: that would be my definition of "ageist".

Except it isnt. 

haras_n0sirrah

There are lenders who have no maximum age limit but affordability will be based on retirement income
You need a lender who will lend to you rather than just going to Nationwide

MWT

haras_n0sirrah said:

There are lenders who have no maximum age limit but affordability will be based on retirement income
You need a lender who will lend to you rather than just going to Nationwide

... and the OP would be well advised to use a broker who knew how to find them, someone like you for example, although you can't say that, I can 

No point in trying to force a lender to go outside their risk profile, they will always have a way to deny the loan, just use those who know where to find the lenders who are willing to lend to you...

A1jockey

Thank you for your response.  You make a valid point, but miss the core of the issue. Rejecting an application purely on age is the key element that is potentially unlawful.  I quite accept it is a risk factor that they must take into account, but in conjunction with their other risk criteria.  Would it be acceptable to to discriminate purely on age alone?; I think not. that is what they are effectively doing.  If, as you say their aim is to get the loan repaid by the borrower, which is fine, the lenders are quite happy to foreclose and recover their loan if they see fit, as I'm sure many will attest.  There are more informed lenders who do not place age restrictions on borrowers, so I guess that's where this business will go.  Frankly, I have run out of steam with this.

Thrugelmir

No different to lenders setting other criteria as to the customers that they are targeting. Mortgage books are written at the macro not the micro level. That's the lenders prerogative. As risk is both priced and managed. Also needs to be sufficient volume of business to make it worthwhile opening a book. 

csgohan4

A1jockey said:

Thank you for your response.  You make a valid point, but miss the core of the issue. Rejecting an application purely on age is the key element that is potentially unlawful.  I quite accept it is a risk factor that they must take into account, but in conjunction with their other risk criteria.  Would it be acceptable to to discriminate purely on age alone?; I think not. that is what they are effectively doing.  If, as you say their aim is to get the loan repaid by the borrower, which is fine, the lenders are quite happy to foreclose and recover their loan if they see fit, as I'm sure many will attest.  There are more informed lenders who do not place age restrictions on borrowers, so I guess that's where this business will go.  Frankly, I have run out of steam with this.

Lenders can choose their own criteria, if you don't like it, you can try someone else. But bare in mind, past retirement age, your unlikely to be earning what you were before retirement hence why some lenders may seem reluctant, but actually if you can go show your pensions more than covers the mortgage, that usually is fine with some lenders. 

In regards to repo's, banks absolutely will use this as a last resort and it is very costly for the bank and the borrower. If they can't get the money back on your death guess who pays? they do. So they would prefer not to go down this route. Hence why some have put a limit on how old they would lend to.

My lender only lends to my retirement age, their money their rules. Nor would I want a mortgage when I am drawing my pension.  

https://england.shelter.org.uk/housing_advice/repossession/what_happens_when_a_lender_sells_your_home

Instead of being bitter about your age discrimination, try and put yourself in their shoes, their taking on much more risk as you will unlikely have a life insurance policy to cover your mortgage. 

Maybe consider buying a house for cash or look at why your buying a house this late, renting is reasonable as your still having a roof over your head and it isn't dead money as your getting a service in return. 

ACG

A1jockey said:

Thank you for your response.  You make a valid point, but miss the core of the issue. Rejecting an application purely on age is the key element that is potentially unlawful.  I quite accept it is a risk factor that they must take into account, but in conjunction with their other risk criteria.  Would it be acceptable to to discriminate purely on age alone?; I think not. that is what they are effectively doing.  If, as you say their aim is to get the loan repaid by the borrower, which is fine, the lenders are quite happy to foreclose and recover their loan if they see fit, as I'm sure many will attest.  There are more informed lenders who do not place age restrictions on borrowers, so I guess that's where this business will go.  Frankly, I have run out of steam with this.

There is not much profit in mortgages. It only makes sense for high street lenders as they pile it high and sell it cheap. When a Mortgage lender is charging 2% on a mortgage, if the customer dies and they have to repossess or go through a legal process to get their money back, there is a chance they may not make any profit at all, as they are not supposed to make profit from fees charged to do admin and the like. 

So yes, it is a higher risk to the lender and I suspect they can "discriminate" (or make a business decision). I would imagine the lenders you are looking at who will do what you want will probably be charging more. As soon as you go above 70-75 the lender pool starts to reduce quite drastically... those lenders charge a higher rate to price for the extra risks they take, not just on age but on any number of things. 

They are not more informed, they are just more flexible and more expensive for the privilege. 

davidmcn

A1jockey said:

Rejecting an application purely on age is the key element that is potentially unlawful.  I quite accept it is a risk factor that they must take into account, but in conjunction with their other risk criteria.

Doesn't seem inherently unlawful to me - do you think the same about the fact that, say, motor insurers use age (among other factors) to determine the level of premium (or whether they want to insure at all)? There are objective justifications for why they consider age to be relevant.

enthusiasticsaver

It would not have been rejected purely on age.  As others have said the risk of the borrower dying or income reducing while the loan is still ongoing is higher obviously in someone of 70/75.  Banks have always shied away from lending to older customers.  Irrelevant that they have the security of the property as they do not want the hassle of going to court and forcing a sale especially if there is someone else still living in the property. 

Linton

Why not take out a lifetime mortgage?