People over certain age face losing homes in mortgage ‘crackdown’
Pensioners face losing homes in a new mortgage crackdown. Lenders are cracking down on homeowners who need a mortgage after they retire amid the ongoing Cost of Living crisis and volatile housing market due to financial pressures.
Halifax cut back to 70 in a move described as “outrageous” last week. Adrian Lowery, financial analyst at wealth manager Evelyn Partners, said: “For many older borrowers, this might feel like the goalposts are being shifted back.”
Jim Boyd, chief executive of the Equity Release Council, said the “harsh reality” is that higher interest rates and living costs are making it harder for people to clear mortgage debt before they retire. “The good news is that people aged 65 or over have approximately £2.6 trillion of net housing wealth,” he warned.
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Many will struggle to service a mortgage in their late 60s and 70s. Some are in denial, and are using marathon mortgages as a “coping mechanism”, Mr Lowery has complained. Mr Lowery said: “Marathon mortgages have become popular among many homebuyers in an effort to keep monthly costs down, but those in their middle age could be worst-affected, as this is the cohort most likely to look at extending their loan term into retirement, possibly for their ‘forever home’.
“Beset by a number of financial challenges including high house prices, elevated mortgage rates, the general cost of living, and acting as the bank of Mum and Dad (possibly also caring for elderly parents to boot), the leeway to extend a loan past 70 years has been adopted as a coping mechanism.
“While many such borrowers will be confident that they can either shorten the loan at a later date, or continue repayments beyond 70 – either because they will keep working or have a good pension in place, or both – the Halifax would probably argue that they need to have responsible criteria in place.
“There’s no doubt that as property prices remain very high and as we are very unlikely to return to the super-low mortgage rates enjoyed until a couple of years ago, many households will have to revise either their homebuying demands, their cash-flow expectations or possibly even the date and style of their retirement.”
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