Older borrowers need our mutual benefit
The UK government conducts a census every ten years to create a snapshot of the population and establish a record of the demographic trends across the nation that are used to inform and create social policies. The most recent was performed on March 21, 2021.
What the Census data highlighted is what many of us already suspected - British society is changing. The dripping tap of news about the issues facing public health services as well as pensions and broader financial services is a reminder that we are incredibly successful at staying alive. The aspirations of 60 year olds today are not what they were even thirty years ago.
This brings interesting challenges to the housing and mortgage sectors. As a building society, we too know how much society has evolved over the last decade, let alone past one hundred years and we all need to keep pace with it.
From a housing point of view, we need to challenge our ideas of what might have been appropriate in the past. Do we have the right stock for a population that might want to downsize? Without choice, supply can be constrained as the older generation are occupying the traditional family home for longer creating less options for borrowers looking for the next step on the housing market. Divorce among the older age group is also becoming more prevalent. So, we have more demand for single household accommodation.
Age UK reported from ONS data in their updated report of 2019 that 5.5% of people aged 65 and over in England were single (never married or civil partnered), 60.0% were married or in a civil partnership, 10.5% were divorced and 24.1% were widowed. It estimates that 23.4% of male and 29.2% of female babies born in 2018 will survive to the age of 100 (ONS, 2018). The 85 plus age group is the fastest growing and is set to double to 3.2 million by mid-2041 and treble by 2066 (5.1 million; 7% of the UK population).
What all this means is that the way we lend has had to evolve too to support people. Of course, later life products such as Equity Release are one option, but they are not right for everyone.
To that end we are seeing lenders, including ourselves, evolve criteria to meet such demands. For example, we have no upper age limit if the mortgage is taken on a repayment basis. And, if it is an interest only loan, we can go to age 80 with no minimum income provided there is £225,000 worth of equity and no more than 66% if using the sale of the property as the repayment vehicle.
Furthermore, we will accept unused investment plans or pension pots with drawdown facilities to support income calculations.
The point here is that lenders are changing their propositions to accommodate older borrowers because their needs and lifestyles are changing and that’s how it should be.
Building societies are driven by their purpose. That’s why we’re committed to our cause: to actively find ways to help people have a home, by supporting people who couldn’t buy without our help and working with groups in our community who offer services for shelter and housing. But this need is evolving too to support those in later life who need our help when they encounter life events or make decisions that impact their mortgage arrangements. Society is changing and so are societies.
Kathy Bowes
Intermediary Manager
Want to know more? Get in touch with our award winning team on 0345 601 2744, or send us an email at intermediary@cambridgebs.co.uk for more information.
