Pensioner Mortgages Collaboration Needed

Pensioner Mortgages Collaboration Needed.

The Council for Mortgage Lenders (CML) has published a report entitled: Consumer Demand for Retirement Borrowing

In simplistic terms, the findings of the report suggest that the government, financial regulators, mortgage lenders and banking groups, financial advisers as well as other interested parties need to collaborate and develop better solutions for borrowing in retirement.

The only solutions available today are equity release schemes such as lifetime mortgages (where interest rolls up) and home reversion schemes where you sell a share or all of your property. There are very few traditional retirement mortgages where monthly payments are required.

Given that we are an ageing population and more pensioners are sat on significant piles of equity whilst younger people cannot afford to get on the property ladder, we agree with the CML that some thinking outside the box and collaboration with government and regulator is required.

In a recent case, HSBC lost a complaint with the financial ombudsman service where it was found to have refused mortgage credit based upon age. That said, we have every sympathy with HSBC and indeed all mortgage lenders given that both lenders and mortgage brokers are required to assess the suitability and affordability of any mortgage application not just today but also stress test the affordability of a mortgage in difficult times.

Comment

It does seem a little crazy that the government appears to have concentrated on people who do not own property with the Right to Buy scheme, the Help to Buy deposit scheme, the Help to Buy indemnity guarantee scheme and with effect from 1 December 2015 the Help to Buy ISA. There has been no stimulus from the government for the in retirement lending market.

We know why we think this is the case. We believe it is to do with encouraging pensioners to keep their property without borrowing against it or creating any debt so that ultimately it can be means tested when a person needs social care either in a residential home or at home and also if there is no debt estate on death is potentially larger meaning potentially more inheritance tax revenue.