Stricter mortgage lending and inflated property prices means it is increasingly challenging for conveyancers and property professionals to target any particular demographic within their business strategies.
It’s been widely reported that the vast majority of young adults are remaining within rental properties, as they are unable to join the property ladder until later in life.
That said, it’s now believed to be a battle for property buyers within their 40s and in some cases 30s, as the Intermediary Mortgage Lenders Association (IMLA) claim lenders are worried they will be penalised and accused of mis-selling by the Financial Conduct Authority (FCA).
The IMLA say that borrowers who don’t qualify within the standard conditions of lenders could be refused a loan. The authority adds that mortgages which are expected to be outstanding beyond the age of retirement could lead to negative implications.
What does this mean for conveyancers – will this impact transactions outside the Buy to Let market? When will consumers actually be able to take the first step onto the property ladder?
Following the Mortgage Market Review (MMR) restrictions that were enforced in April this year, lenders are now obliged to ensure home buyers can pay the mortgage for the entire term. The Executive Director of the IMLA, Peter Williams says uncertainty surrounding pensions has resulted in difficulty for affordability assessments, as new freedoms are being implemented in 2015.
With a standard mortgage term being 25 years, many lenders have reduced age restrictions, according to Williams, as a way to reduce the risk of being in breach of regulations if retired consumers are unable to cover the costs.
A review is expected to be conducted by the FCA over the results of the MMR restrictions. The IMLA say they need to consider this issue and help avoid the unnecessary abolition of retirement lending.
Williams adds that to avoid such drastic measures, lenders need to be given more clarity on boundaries.
How can mortgage lending be made fairer and more accessible for all – should age really be such a major factor? What should the conditions be?
