Buy-to-let investors get mortgages till they're aged 105, while ordinary homebuyers are 'too old' in their 50s
04-05-2015
Britain's biggest building society offers mortgages to buy-to-let borrowers aged 105, but if you want to buy a home to live in yourself you need to be far younger
From Monday April 6, savers over 55 will have access to all their pension cash. Many are expected to withdraw money and pour it into buy-to-let
From Britain's lunatic property market emerges another astonishing anomaly: if you want to buy a property as an investment to let to someone else, you can get a mortgage almost irrespective of your age.
In fact Britain's biggest building society, Nationwide, will lend to you up to the age of 105.
On the other hand if you're wanting to own a home merely for yourself and your family to live in – as some people still aspire to do, apparently – Nationwide wants you to have finished paying off your loan by 75.
Other lenders are even more harsh, as Telegraph Money has repeatedly shown, and turn down borrowers in their 60s or 50s as being "too old".
'Sorry, no mortgage at 48 – your husband's too old'
One reason for the more generous approach to buy-to-let borrowers arises from the huge overhaul to Britain's pension system.
From Monday April 6, savers over 55 will have access to all their pension cash. Many are expected to withdraw money from traditional investments and instead pour it into buy-to-let. For banks and building societies to profit from this trend, they needed to increase the age at which they will lend to landlords.
Several lenders were swift to respond. Nationwide altered its lending criteria in April 2014, shortly after the pension overhaul was announced in George Osborne's 2014 Budget. Buy-to-let investors can take out new Nationwide mortgages up to age 70, with a maximum term of 35 years.
A 70 year-old taking out a Nationwide mortgage for a property he or she lives in would have by contrast a maximum term of five years.
A spokesman said: "A significant proportion of landlords intend to use their buy-to-let property as a form of retirement provision, and this measure allows Nationwide to responsibly support those aspirations".
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Some would say that Nationwide, with these aggressive forays into buy-to-let, is betraying its roots as a mutual whose founding mission was to help ordinary people buy their own homes.
But there's a more important conclusion to draw, about the muddled and counterproductive regulation of mortgages that has evolved under this and previous watchdogs.
Buy-to-let mortgages are very lightly regulated. That means lenders can set the price and terms of buy-to-let loans as they wish, dictated by natural competition, demand and risk.
But the overbearing, cack-handed regulation of mainstream mortgages, on the other hand, means ordinary homebuyers are locked out of the market because in the eyes of the regulator, the Financial Conduct Authority, much mortgage borrowing is "too risky".
Not too risky for the lenders, mind, but for the borrowers.
In its patronising and nannying world view, the FCA has to protect the borrowing public from itself.
The result is that while buy-to-let investors can borrow late into life, ordinary homebuyers cannot.
And while buy-to-let investors can choose the riskier option of borrowing on an interest-only basis, where the capital is not repaid as they go along, ordinary homebuyers cannot.
And while ordinary homebuyers are subject to intrusive and silly "affordability" tests, whereby lenders must document the sums borrowers spend on hairdressers and meals out, buy-to-let investors are not.
These are just some of many ways in which ill-judged regulation has ended up abetting private landlords while making life harder for regular homebuyers.
Mortgage lending does need regulation – the crisis was evidence of that – it just doesn't need the nannying type of consumer regulation which robs everyone of choice and opportunity.
Mortgage regulation for consumers was first introduced in 2004 by the Financial Conduct Authority's predecessor, the Financial Services Authority.
That regulation was a flop in that it failed spectacularly to stop the reckless lending and borrowing that took off in 2005 accelerated up to the banking crisis in 2007-08.
Years after the peak of the crisis the FCA rolled out its subsequent mortgage policing initiative, the formidable Mortgage Market Review, which has now been in force for a year.
Has it improved the lot of the borrowing homebuyer, or helped stabilise the market? Quite the opposite.
It has given lenders licence to cherry-pick the most profitable types of business while depriving the wider market of choice and competition. And it's given rise to the absurd scenario in which centenarian pensioners can have mortgages while youngsters (with decades of earnings ahead of them) cannot.