Mortgages head for grey market as Halifax raises age limit to 80.

The Halifax bank offices, in  Trinity Road, Halifax
The Halifax bank offices, in Trinity Road, Halifax

High street lenders decision breaks the mould.

Britain’s biggest high street lender has made it easier for older people to get a mortgage by raising its age limit on all new applications from 75 to 80.

Halifax said the change, which affects mortgage, further advance and product transfers, which will come into force today.

Stephen Noakes, managing director of retail customer products at the Halifax, said: “As demographics and working habits continue to change, we continually review our products and policies to ensure they reflect the evolving needs of our customers, including those who wish to continue working longer.”

The bank, which has cooperate offices in Trinity Road, Halifax, and branches throughout the region, employees over 6,000 people across the region.

It is understood that at least one other top-ten high-street lender will announce an increase in its age-limit to 85 next week.

The term of any new Halifax mortgage must end before the customer’s 80th birthday, and for joint applications, the rule will still apply to the oldest applicant.

Affordability calculations will be updated to reflect the new maximum age, and any borrowing extending beyond retirement age will continue to require evidence of anticipated retirement income.

Simon Collins, product technical manager at mortgage broker John Charcol, said: “If you’re 55 and you intend to work long beyond the state retirement age you can now take a 25-year term with Halifax which will really help your affordability.

“This is a very under-served area of the market, but I think they could have gone even further. It would be nice if we did see some others following suit, and maybe even edge up to 85.

“Lenders have come under a lot of pressure from the regulator over this. These are very low-risk borrowers with excellent track records with credit scores – why wouldn’t you want to lend to them?”

Lending into old age is nothing new. In fact, before the credit crunch, most banks and building societies would lend up to the age of 85, making it relatively easy for many borrowers in their 60s to get a home loan. In 2007, there was even one case of a 102-year-old man being granted a 25-year, £200,000 mortgage.

But the credit crunch led the banks to look for ways of restricting their lending, and a retreat from the greyer end of the market was a convenient way of cutting their exposure. In 2009, Abbey, now Santander, became one of the first major lenders to pull back from lending into retirement, reducing the maximum age at the end of a mortgage from 85 to 75 years old. It was followed by all its competitors, Leeds Building Society being one of the last, in September 2013.

Mortgages became even less available for older borrowers when the regulator – at that time the Financial Services Authority (FSA) – voiced concerns about lending into retirement.

Its Mortgage Market Review, which came into force in 2014, aggravated the situation, as the banks became concerned that lending into retirement might be branded irresponsible.

Halifax’s move comes as the FSA’s successor body, the Financial Conduct Authority (FCA), is working to devise a Strategy on the Ageing Population, which it aims to launch next year. The document is intended to address the new market dynamics presented by an ageing population. The FCA notes that in the next five years, the number of consumers aged over 65 is expected to increase by 1.1 million. Those aged 85 and over are now the fastest-growing segment of the UK population.

Asked about the Halifax’s move, an FCA spokesperson said: “The MMR was just about making sure responsible lending decisions were made; it wasn’t about stopping any particular individual from borrowing because of their age.

“As far as raising the mortgage lending age limit is concerned, as long as appropriate lending decisions are made and they follow FCA rules, it’s fine. As long as the borrower can afford the mortgage – and can prove they can afford the mortgage – we wouldn’t have a problem with that.”