You’re how old..?

In our age-obsessed society where life expectancy is ever increasing and there is a multi billion industry whose sole purpose is to ensure that that we look and live longer than any previous generation, there was an irony this week as it was announced that mortgage lenders are now actively discriminating against the over 45’s by making it very difficult for us silver/devotees of Grecian 2000/bald individuals to obtain a mortgage that extends past the normal retirement age. Those seeking a mortgage who fall into the ’empty nester’ bracket are to be limited to 10 and 15 year mortgages, even though they may well have excellent long-term pension provision up to their eight decade. Part of the juxtaposition is Gorgeous George (did you know that his first name that he loathes, is actually Gideon?) Osborne’s announcement in October of, “The Pension Freedom Revolution” Simon Lambert, This Is Money, 14 October 2014  where many of the restrictive rules dictating how and when holders can use their pension are to be lifted.  Significantly, individuals will be able to dip into their pension pots, drawing on it when needed.  Hence much nervousness in the ranks of mortgage lenders when contemplating an application from anyone who was in their infancy when man first landed on the moon and Sesame Street was launched (quite a year 1969; forget Neil Armstrong, Big Bird made the cover of Time magazine). The justification for such disquietude is that if people dip into their pensions for any number of reasons, then they may not be able to make mortgage repayments in the long term as the piggy bank will be empty. Cue collective sucking of teeth and, “the computer says no” utterances.  All mortgage underwriting is done on a computer with the software having been written and uploaded by that quaint notion-a human being. It is only tacitly acknowledged that the said individuals may well have adjusted the software following direction from on high whereby at the most recent board meeting the executives decree that the company is to reduce its lending this quarter/half year/year. I do believe that everyone is rather missing the point. Regardless of how much income someone plans to earn over the next 25 years, it is how they decide to spend it that matters. If a 47 year old goes in to the Halifax with maximum pension provision up to the age of 70 at £50k per annum, what guarantee does the lender have that the individual sitting in front of them (who is probably old enough to be their father), is going to spend it wisely? Mid-life crises involving pneumatic Russians, sports cars, expensive bikes (Bradley Wiggins, you have a lot to answer for) and a desire to attend Glastonbury can all knock sensible saving plans into a cocked hat. Common sense has to prevail with mortgages underwritten on all available information coupled with a judicious appraisal by someone with common sense. Traditionally this is what bank and building society managers were actually rather good at, rather than trying to flog PPI, additional credit cards and dog biscuits.