Over 40s being 'frozen out' of home loans

You may need to be under the age of 40 to be offered a standard mortgage

Home buyers over the age of 40 are increasingly being "frozen out" of mortgages , the industry is warning.

New rules mean that lenders are now restricting loans to anyone who will still be paying off their mortgage by the time they retire.

And yet many people cannot afford to buy a home until they are 40 or even 50, say some of the largest lenders.

Under a standard 25 year term, a 45 year-old borrower would be 70 before the loan was paid off.

The new rules - known as the Mortgage Market Review (MMR) - were introduced by the Financial Conduct Authority (FCA) in April this year, to make sure that borrowers could afford to pay back what they borrow.

'Extinction'

But a group of 24 banks and building societies, including Nationwide, Barclays and Santander, says the rules are preventing lenders offering mortgages to anyone who will retire before the loan is repaid.

They say the issue is "causing real concern".

Some lenders have already imposed maximum age limits for borrowers, as they cannot be certain what their income will be in retirement.

"To avoid a situation where regulation brings about the extinction of mortgage terms that stretch into retirement, we need clarity and confirmation about where the boundaries of responsible lending truly lie," said Peter Williams, the executive director of the Intermediary Mortgage Lenders Association (IMLA).

IMLA - which represents the 24 lenders - wants the FCA to tackle the issue in its review of MMR early in 2015.