Last week an interesting story dropped into my inbox relating to our recent blog posts about problems facing older borrowers. It’s certainly a hot issue on the mortgage scene at the moment.
The Financial Ombudsman Service (FOS) recently ruled against HSBC for turning down a mortgage application for a couple in their forties. Stating that the lender “relied on untested assumptions, stereotypes or generalisations in respect of age”, the FOS ordered the bank to pay £500 to the couple, and told it to reconsider the couple’s application.
HSBC refused to provide a £250,000 interest-only mortgage, paid over 18 years, because the husband would be over 65 at the end of the term. It claimed to be a “responsible lender” that ensures customers can repay mortgages.
This is an interesting development, I think, and may trigger similar cases. After all, these days, your age isn’t a direct comparison to when your income will change. Will we retire at 65, 66 or 67? Or even later? It’s becoming clear that the one-step approach to underwriting can’t be the way forward, and the market needs understand the potential among this group of borrowers.
On a slightly different note, we’re noticing that some B2L lenders are opening up to people who want to use their pensions pots to buy. Recently, specialist B2L lender, Fleet Mortgage Services, increased the maximum age for end of the term from 75 to 85.
Could this be the early signs of a tide-change?