Interest-only mortgages: Age UK's response
Published on 02 May 2013 12:01 AM
Interest-only mortgages: Age UK's response to the FCA Review
The large numbers of older people with interest-only mortgages means there is no room for complacency.
Each year between 2017 and 2032 40,000 house-holds aged 65 and over will have interest only mortgages which are due to mature. In addition, 25,000 households aged between 50-64 will see their interest only mortgages mature, rising to 130,000 households in 2032.
FCA modelling suggests that nearly half of all interest only loans are unlikely to be paid back in full.
Of those, half will still owe £50,000 - a significant amount of money for many people to find from existing savings which might have been ear-marked for retirement.
While some may be able to extend their mortgage, this is likely to be difficult for those who are already retired, because even if they could afford it many banks and building societies impose arbitrary age limits on mortgage lending.
As the FCA's review shows that one in ten borrowers have no repayment strategy, Age UK thinks there is no room for complacency, especially since the current low interest rate environment will not continue indefinitely. Age UK is calling for lenders to work with older mortgage borrowers to find affordable and realistic solutions.
Michelle Mitchell, Age UK's Charity Director General said,
'With one in ten borrowers having no plan as to how they are going to pay off their loan - there is simply no room for complacency for lenders or older consumers. We call on banks and building societies to lift their arbitrary age limits on loans which unjustifiably prevent many older people who could afford a mortgage from extending the term of their loan.
'Decisions on lending should be based on whether an individual is able to repay a loan not on an outdated vision of what it means to be older. It is also important to have access to targeted, independent advice for those older people who are experiencing difficulties.'
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Media contact: Mallary Gelb
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Notes to editors
For media enquiries relating to Wales, Scotland and Northern Ireland please contact the appropriate national office: Age Scotland on 0131 668 8055, Age Cymru on 029 2043 1562 and Age NI on 028 9024 5729.
Age UK is the new force combining Age Concern and Help the Aged, dedicated to improving later life.
We provide free information, advice and support to over six million people; commercial products and services to well over one million customers; and research and campaign on the issues that matter to people in later life. Our work focuses on five key areas: money matters, health and well being, home and care, work and training and leisure and lifestyle. We work with our national partners, Age Scotland, Age Cymru and Age NI (together the Age UK Family), our local Age UK partners in England and local Age Concerns. We also work internationally for people in later life as a member of the DEC and with our sister charity Help Age International.
Age UK is a charitable company limited by guarantee and registered in England (registered charity number 1128267 and company number 6825798). Age Concern England and Help the Aged (both registered charities), and their trading and other associated companies merged on the 1st April 2009. Together they have formed the Age UK Group ("we"). Charitable services are offered through Age UK and commercial products are offered by the Charity's trading companies, which donate their net profits to Age UK (the Charity).