With effect from today, Monday 29th January, HSBC has made a number of amendments to its lending into retirement policy.
For applicants who are more than 10 years from age 70 or their anticipated retirement age (whichever is sooner), HSBC’s max age at the end of term remains 80 however, affordability needs to be evidenced up to the 70th birthday of the oldest applicant.
Where affordability is evidenced, a term up to age 80 can be taken.
In addition, HSBC will no longer require confirmation of pension provision to be provided for these customers.
For applicants who are within 10 years from age 70 or their anticipated retirement age (whichever is sooner), affordability must be evidenced up to the 70th birthday of the oldest applicant based on earned income.
Where affordability is evidenced, a term up to age 80 can be taken.
To ensure HSBC continue to lend responsibly, the lender will also require affordability to be evidenced based on pension projections over the required term.
Reaction:
Darryl Dhoffer, mortgage expert at The Mortgage Expert:
“WOW – HSBC out of the blocks with lending up to the age of 80. With only proof required at the age of 59, to be able to afford the mortgage to 70, clients can extend overall term to 80 – without proof of pension!
“I do think HSBC, maybe keeping an eye on the 1.6 million borrowers coming off historical low rates, by offering a way to extend to 80, without proof of pension projections, and this may be their way to soften monthly repayments, in a higher rate arena – might be the only option for some borrowers.”
Akhil Mair, director at Our Mortgage Broker Limited:
“While HSBC’s decision to extend their lending affordability criteria may raise eyebrows, it also signals a bold step towards financial inclusivity.
“Embracing a broader spectrum of borrowers challenges traditional norms and opens doors for those seeking financial opportunities later in life.
“It’s a move that sparks conversation and encourages innovation in the lending industry.
“Kudos to HSBC for daring to break barriers and redefine financial accessibility and let’s hope more will be done for the first-time buyers in 2024.”
Craig Fish, director at Lodestone Mortgages & Protection:
“This slight change in policy from HSBC is only making their previous policy slightly more responsible in that they wish to check affordability up to age 70.
“Not requiring evidence of a pension though is a worry in my opinion and this should be looked at. It’s good to see HSBC amongst other lenders still continuing to service those clients who need mortgage assistance a little later in life.”
Gary Bush, financial adviser at MortgageShop.com:
“A BIG pat on the back this morning goes out to HSBC for their newly announced flexibility for Later Life Lending up to age 80 years – this is going to cause much panic in the boardrooms of competing UK lenders.
“With Halifax and Santander, two of the big lenders, confirming in recent years new flexibility for mortgage applicants to age 75 – to have HSBC respond in this way shows great flexibility and understanding to borrowers and will bring about other lenders to follow with similar arrangements.”
Graham Cox, founder at Self Employed Mortgage Hub:
“HSBC become the latest lender to extend their mortgage affordability using earned income alone.
“The crucial detail is that the mortgage has to be affordable on a term up to the oldest applicant’s 70th birthday.
“If it is, a term up to age 80 is possible without assessing pension income. Good news for borrowers in one sense, but ultimately it means paying more interest, for longer.”
Elliott Culley, director at Switch Mortgage Finance:
“Although flexibility for borrowers is always welcome, I would be tentative about recommending a mortgage to the age of 80 years old for a borrower with no pension provisions.
“I am sure there is a need for this product, but a cautious approach would be advised into whether this will benefit the borrower long term.”
Clive Read, owner at Goldmanread:
“HSBC’s new lending into retirement policy reflects the fact that in reality the old goal of “paying off your mortgage” is not going to be possible for many people.
“As house prices have risen and affordability becomes stretched, lenders need to be able to meet the demand for higher mortgage levels.
“One factor that impacts affordability is monthly repayments, the longer the term, the lower the monthly payment.
“The reality for many is that downsizing will be the way a mortgage is fully repaid and HSBC’s policy change is just another acknowledgement of changing demographic influences on the housing/mortgage market.”
Peter Stamford, mortgage expert at The Mortgage Uni:
“HSBC has worked out how they can offer lucrative extended-term mortgages to middle-aged borrowers as well as the younger ones.
“This may not seem like a huge deal at first glance, but it actually has massive implications for lending into later life and HSBCs profit margins.”
Simon Bridgland, broker and director at Release Freedom:
“This should help those who perhaps were faced with mortgage terms that would have been unaffordable so will undoubtably help some by allowing for a longer period in which to repay the loan.
“Working until age 80 sounds like a doable thing for some, which would afford breathing space, but will underwriting let many occupations pass at that age.
“Any manual jobs would likely fall foul of underwriting as realistically can someone be expected to be working in a roll which is physically demanding knocking on 80 years of age.
“HSBC underwriting would do well to distribute an acceptable occupation list for those considering such terms.”
Ben Perks, managing director at Orchard Financial Advisers:
“As the rate war subsides it seems criteria battle has begun.
“HSBC allowed borrowers to go to 80 previously, but they have now removed a few of the obstacles in the way.
“This will be welcome news for those struggling month to month, stretching their mortgage term could alleviate the pressure on household budgets.
“Do people want, and can they afford, a mortgage in their late 70s though? This should be used as a short-term measure and efforts made to reduce the term when possible.”
Ben Tadd, director at Lucra Mortgages:
“HSBC’s change in policy further cements their intent to lend this year, by opening up the option for borrowers to extend their mortgage term up to age 80 where they meet lending criteria.
“Good news for many existing borrowers who are coming off of a low fixed rate this year, as it allows them to potentially increase their term to reduce their monthly payments down, but an air of caution needs to be applied as these borrowers ultimately will spend a lot more on interest by extending the term out.”
Ken James, director at Contractor Mortgage Services:
“’Mortgages to age 80 are you mad!’ – this is the cry we will hear from many.
“There is a demand for this length of term from many people, Life changes such as divorcing in later years and having to start on the property ladder again or extending your mortgage term as a way to reduce the monthly mortgage when tested with high interest rates, is another.
“Whilst we would all like to have shorter terms this is not always possible, the choice to take this to 80 is not taken lightly by most but it does offer a client the option.”
Richard Jennings CeMAP, founder and managing director, at Richard Jennings Mortgage Services:
“On paper this is a great headline maker. It will certainly have its usage and will definitely help those who are coming off cheaper interest rates and may struggle with affordability.
“It does however come with potential risks, taking a mortgage to 80, without proof of a pension income adequate to support this could be a case of kicking the can down the road.
“With proper advice, tailored to your own needs this may be a suitable solution, but it relies on receiving advice from a professionally qualified advisor.”
Scott Taylor-Barr, principal adviser at Barnsdale Financial Management:
“The world has changed and it’s great to see HSBC re-looking at things like retirement ages; why should an entrepreneur making their living from leading a web-based drop shipment business have a retirement age of 60-something?
“I have plenty of clients that choose to work beyond what used to be considered retirement age, they may change their work or move to part-time, but they are certainly not totally stopping work anytime soon, so it’s good when lenders accommodate that, rather than forcing people into boxes they don’t necessarily fit in.”
