Retirees seeking modest mortgages are being turned away by the UK’s biggest banks, according to new research commissioned by the Family Building Society.
A mystery shopping exercise revealed that all six of the UK’s major high street lenders rejected applications from older borrowers, despite the applicants having secure retirement incomes and requesting loans that met the lending criteria of the Family Building Society.
The study approached Lloyds, NatWest, Barclays, HSBC, Santander and Nationwide with a series of mortgage requests. Each involved a 10-year term and a choice of products including five-year fixed rate, two-year fixed rate or two-year discounted. None were accepted.
In most cases, applications were declined either on the basis of age or were only considered if the mortgage term ended before the borrower reached the lender’s upper age threshold, which would have forced them to accept significantly higher monthly repayments over a shorter term.
The research also revealed a consistent reluctance among the large banks to engage with potential borrowers over the phone. Although mystery shoppers were initially told to submit an online Agreement in Principle before discussing their options, they were usually able to persuade call handlers to complete the form with them during the call. Nevertheless, this preference for digital-only engagement was seen as another barrier for older applicants.
Alistair Nimmo, director of marketing at the Family Building Society, said: “It is extraordinary that in today’s financial climate and the introduction of Consumer Duty which rightly has a focus on good customer outcomes, the major lenders are still discriminating against older borrowers purely because of their age.”
He added that smaller building societies, including his own, remain willing to consider lending into retirement, provided the loan is affordable. “In our experience these borrowers, many of whom have solid pension pots, are much more secure than those of working age, who could be made redundant with little warning. Indeed, we will lend a new mortgage to a 90-year-old, but only if it is affordable.”
