House of Lords attacks lenders’ age discriminating criteria
Mortgage lenders have come under attack by the House of Lords for discriminating against older borrowers by placing age restrictions on their homeloans.
Lenders were accused of ‘approaching the [Mortgage Market Review] rules in a way that is against the spirit set out by the FCA’.
The issue, debated yesterday in Westminster, was raised by Tory party member Baroness Gardner of Parkes. She called for the government to urge banks to abolish age restrictions on bridging loans for asset-rich, cash-poor borrowers wishing to downsize, who require a small mortgage.
Baroness Parkes said the age limit on banks’ bridging finance had fallen from 75-years-old to 70 and 65 in the case of some banks she had called.
“Older people are having major problems because where, years ago, bridging finance would have been available to anyone – particularly if they had big equity in a house and were moving to a less expensive house – there is now a strict age limit.”
Fellow Tory member Lord Flight said banks’ refusal to lend to borrowers over the age of 70 had stemmed from the view that it was what the regulator wanted, which created a fear of not wanting to go ‘out on a limb’.
“Basically, the regulator needs to be advised to make it clearer that it wants to see banks use their initiative.”
Lord Newby, Liberal Democrat and chair of the debate, said the government was in support of homeowners having the freedom to downsize at any age but he did not think a restriction on finance was the main barrier.
He said the a lack of suitable accommodation to move to was the biggest constraint on older people wanting to move home.
He admitted there was a problem in the way banks dealt with older people but said this had nothing to do with bridging finance. He said banks were not using the discretion that had been afforded to them by the Financial Conduct Authority (FCA) for borrowers looking to remortgage on the same terms.
Lord Newby said he hoped to see some ‘movement’ on this issue when the effects of the Mortgage Market Review were reviewed by the FCA later this year.