In a bold statement challenging the status quo, the founder of later life lending firm LiveMore has accused the mortgage industry of blatant age discrimination, highlighting a systemic issue that affects many older individuals seeking financial solutions in their later years.
The Plight of Older Borrowers
LiveMore’s CEO, Leon Diamond, has shed light on the grim reality faced by many senior homeowners. He cites numerous instances where older individuals, often with impeccable repayment histories spanning decades, are unfairly denied mortgage extensions simply due to their age. This discrimination isn’t just a theory; it’s a daily struggle for many who find themselves rejected by banks, lenders, and even brokers.
The Misguided Notion of Affordability
One critical area of concern is the narrow view of income adopted by many lenders. Most traditional lending institutions focus solely on salary as a measure of income, disregarding other substantial sources like pensions, investments, rental income, and even foreign earnings. This outdated perspective fails to recognize the diverse financial streams many older individuals rely on, leading to unfair lending practices.
Perception vs. Reality
Research commissioned by LiveMore reveals a stark perception gap. Among 2,000 individuals surveyed between the ages of 50 and 90, a mere 4% believed they would be eligible for a mortgage. This percentage drops even lower, to 2%, for those over 80. Such statistics underscore the widespread belief among older generations that they’re unwelcome in the mortgage market.
A Widespread Issue of Discrimination
The issue transcends mortgages, touching various aspects of life for the older population in the UK. A report by the Centre for Ageing Better highlights the negative stereotypes plaguing older individuals, portraying them as incompetent or burdensome. This discrimination is particularly acute for women and people from minority ethnic groups, who face compounded challenges.
LiveMore: A Beacon of Hope
LiveMore aims to stand as a testament to the possibility of fair lending. The company’s website features numerous case studies of older individuals who, against all odds, found financial solutions in their later years. These stories could serve as a beacon of hope and a call to action for the industry.
The Call for Change
Leon Diamond emphasizes the need for the mortgage industry to adapt and evolve. He argues for a more inclusive approach to lending, one that assesses affordability holistically, considering all forms of income and assets. He also points out the importance of education and awareness among customers, brokers, and the industry.
Regulatory Support and Innovations
The introduction of Retirement Interest Only (RIO) mortgages in 2018, regulated by the Financial Conduct Authority (FCA), marks a positive step. However, access to these innovative products remains limited. The CEO stresses that the issue isn’t the lack of mortgage options for older borrowers but the accessibility to these options.
A Path Forward
In conclusion, there’s a clear need for a shift in mindset within the mortgage industry. By adopting a more holistic view of affordability and embracing products like interest-only and RIO mortgages, lenders can open doors for a demographic that’s been long marginalized. As Diamond rightly puts it, the entire market, under the Consumer Duty guidelines, should work towards delivering good outcomes for everyone, regardless of age. This change isn’t just a matter of fairness; it’s a necessity for a diverse and inclusive financial landscape.