All of the lender’s residential mortgages will accept 100% of a borrower’s pension as well as other forms of income, such as investments, when addressing affordability.
Research among a representative sample of the UK conducted by Ipswich Building Society has found on average one in five (18%) people expect to be still paying off their mortgage in retirement, including a fifth (26%) of 25-34 year olds thinking about their future commitments. A third of the UK overall (33%) are concerned about the availability of mortgage products in the future when they are older, while just over a third (35%) believe they will end up paying a higher mortgage rate in the future as a result of their age.
In response to the Mortgage Market Review some banks and building societies have restricted lending to borrowers where the term takes them over the age of 65. This has resulted in borrowers in their mid-forties and above having a reduced choice of mortgage providers and products. Furthermore it limits the life choices of these individuals, for example limiting their ability to release the equity in their property to help family members onto the property ladder or to help address long term health needs.
Paul Winter, Chief Executive of Ipswich Building Society, said:
“Our research has shown the availability of mortgage products is an issue of concern to all age groups, not just those approaching retirement. Sadly many of the high street lenders have decided to interpret the recent mortgage regulation as a reason to restrict borrowing to older and retired borrowers, adopting a ‘computer says no’ approach to applicants. I don’t believe MMR was ever meant to be used in this way.
"Ipswich Building Society is committed to supporting borrowers of all ages as well as those it identifies as mortgage misfits, while retaining a diligent approach to lending. Examples of mortgage misfits include the self-employed, self-builders, first-time buyers, older generations and those who have experienced a lifestyle change. Our manual underwriting means we are able to take into account other forms of income, including pensions and investments, more readily. I would urge my colleagues at other lenders to reassess their product offering and lending criteria for retirees and older borrowers who have been unfairly restricted or alienated from the mortgage market since MMR.”
