The Halifax says it is responding to the growth in Britain’s ageing population by raising its upper limit for mortgages from 75 to 80.
The lender took its decision amid growing political concern about a lack of credit for older people.
The bank announced the move in a week of renewed debate about lending practices after Barclays said it had launched a 100% mortgage – the first time such a product has been widely available since the financial crisis.
The Halifax – part of the country’s biggest lender Lloyds Banking Group – had earlier released the findings of its own research that suggested one in three 20 to 45-year-olds expect to be working beyond their retirement age to pay off their mortgage.
It said the change it was implementing applied to new mortgage applications only and the borrower’s term would be allowed to run until their 80th birthday.
Managing director for retail customer products at Halifax, Stephen Noakes, 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 industry has been reluctant in the past to offer mortgages to those of retirement age, although there has been some flexibility among smaller providers on age limits for borrowers with larger incomes.
Metro Bank – a challenger to the established lenders – has no age limit.
David Hollingworth, a spokesman for broker London and Country, welcomed the development from the Halifax. He said: “The question has been, why aren’t more high street names able to help older borrowers?”
The Financial Conduct Authority expects the number of consumers aged over 65 in the UK to increase by 1.1 million over the next five years so there is a growing potential market for lenders to tap – especially if customers are working on.
A report from Royal London earlier this year warned that today’s workers will be forced to work into their late 70s to get the same level of pension as their parents’ generation.
It has been suggested that many older borrowers may be wanting to raise money to help their children or grandchildren secure deposits.
A separate study from Legal & General on Tuesday forecast that the‘Bank of Mum and Dad’ would be among the top ten lenders in the country this year, pumping £5bn into mortgages to help their younger relatives.