Just days after Halifax and Scottish Widows said they would raise their age limit for mortgages from 75 to 80, Nationwide has announced it is increasing its threshold too.
The UK’s biggest building society is raising its age limit for borrowers by ten years to 85. The change – which applies to when a mortgage term ends, not the maximum age a borrower at which can apply for a loan – is yet another sign of the impact of rising house prices on buyers.
Nationwide said the increase was due to ‘growing demand’, and the limit would be in force from July. It means a 60-year-old could take out a 25-year mortgage as long as they prove they can afford the repayments.
There have been calls for the industry to do more to help older buyers after tougher mortgage checks, introduced in the wake of the financial crisis, have made it harder for middle-aged people to get a home loan.
Tom McPhail from Hargreaves Lansdown, told BBC Radio 5 Live’s Wake Up To Money that ‘this looks really interesting’. He added: ‘Why pay off the mortgage at at all? Having lent the money and let someone buy a house, why not just let it run until the day they die? As long as the value of the property is there to meet the liability in the future, why worry about paying it off when you are alive?’
Average UK house prices rose 9.2 per cent in the year to the end of April according to the latest Halifax house price index. However, on the more volatile monthly measure they fell 0.8 per cent. Martin Ellis, Halifax housing economist, said that current market conditions remain very tight as the severe imbalance between supply and demand persists. He adds that low interest rates, rising employment and real earnings, should continue to push house prices up over the coming months.
The Daily Mail reports that interest rates could be cut in the coming months and will not rise until late 2019. Rates have been frozen at an all-time low of 0.5 per cent since March 2009 and it was long thought that the next move would be up as the economy recovers. But fears that Britain is on the brink of a fresh downturn have triggered speculation that rates could be cut again – taking them towards zero.
Meanwhile, there’s a story in The Telegraph saying that nearly half of all household income is spent running the home. That’s according to a new report which reveals the financial strain of paying household bills in the UK. The average annual cost of household bills and mortgages for UK homes with three bedrooms is almost £20,000, the research by insurance company More Than found.
Monthly running costs for owners of three-bedroom homes are £1,634 on average, while renters pay £1,576 per month. For households where two working adults take home the average yearly salary of £27,600, this means homeowners spend 45 per cent of post-tax earnings on household bills and mortgages.
How did failed retailer BHS end up with a £571 million deficit in its pension scheme? MPs will try to find out this afternoon, when chief executives of the Pensions Protection Fund and the Pensions Regulator appear before a committee of MPs. The Financial Times reports today that an inquiry by the Pensions Regulator into BHS had started a year before the collapse of the retailer.
In other news, new global rules forcing companies to report taxable activities country-by-country publicly have been called for by a group of 300 prominent economists. In a letter to world leaders, the group urges the UK to ‘take a lead’ in the push for more tax transparency. Poor countries are the biggest losers from tax havens, they claim.
The letter’s signatories, co-ordinated by charity Oxfam, include best-selling author Thomas Piketty and 2015 Nobel Prize economics winner Angus Deaton. The letter comes ahead of the UK government’s anti-corruption summit on Thursday, which politicians from 40 countries as well as World Bank and IMF representatives are expected to attend.
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