Mortgage availability reaches 11 month high but pensioners face ‘damaging’ costs

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Mortgage availability has risen for the fourth consecutive month according to analysis from moneyfacts.co.uk. Since October 2020, the total product choice has increased by 42 percent, the largest four-monthly rise seen since 2007.

With 88 more deals on offer compared to last month, the 90 percent loan-to-value (LTV) tier saw the largest monthly rise in availability.

At 248 products now available, this represents a 38 percent growth in availability since October.

Additionally, the average two-year fixed rate for all LTVs rose for the seventh consecutive month, and the five-year equivalent for the second month running, however, the rises were only 0.01 and 0.02 percent respectively.

According to moneyfacts.co.uk, the average shelf life for all mortgage deals has now risen to 40 days in what has been deemed to be a sign of the market “settling down”.

Eleanor Williams, a Finance Expert at moneyfacts.co.uk, commented on these changes, noting what they meant for first time buyers: “Recent HMRC data reflects the boom in activity in the mortgage sector at the end of 2020, with stamp duty transactions in the final quarter of last year surging to over 40 percent higher than the previous quarter, as those rushing to take advantage of the temporary holiday in stamp duty and those unleashed after the enforced shutdown flooded the market.

“This is echoed in our data where, following four months of improvement, at 3,215 products, overall choice has now returned to the highest level recorded since March 2020.

“Further positivity for potential borrowers, regardless of the level of equity or deposit they have, may come from the fact that this improvement in choice has been recorded across the LTV tiers (with the exception of 95 percent LTV, where the five remaining deals are specialist products).

“Those with 10 percent deposit or equity might be especially pleased to note that this tier has, for a second month, seen the largest uplift in availability.

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“With products at this level often favoured by first-time buyers and traditionally being seen as higher risk for providers, willingness to extend lending in this risk bracket could be an indication that lenders have confidence in the sector, despite ongoing, wider economic uncertainty.”

However, while young first time buyers may be benefiting from changing dynamics, pensioners are being hit hard.

According to new analysis from Responsible Life, a gender pension gap is crippling the ability of retired couples to arrange mortgages, by as much as seven times worse than the national average.

The gender pension gap is the percentage difference between pension income for men and women, with new analysis showing the average gender pension gap among retirees applying for a mortgage is 269.5 percent, compared to 40 percent for the population at large.

More than half (53.5 percent) of retired couples making a mortgage application have a gender pension gap of more than 100 percent according to Responsible Life’s research, with the worst gap found to be a staggering 4,433 percent.

The research involved Responsible Life analysing hundreds of retiree mortgage applications submitted to the Retirement Mortgage Service (RMS) and they warned the problem has “barely improved” in recent years.

Responsible Life noted the relatively recent introduction of workplace pensions promises to help close it but family commitments and a shift to part-time working among parents are the two main factors credited with inflating the gender pension gap in later life.

Steve Wilkie, the Executive Chairman of Responsible Life, commented on these findings: “The gender pension gap can be as damaging as the gender pay gap, particularly when it comes to borrowing against your home.

“That problem worsens the older you get, until couples unexpectedly find themselves unable to borrow what they think they can afford because sole survivorship suddenly becomes the dominating factor for lenders.

“Most studies on the gender pension gap focus on the average statistics between men and women or all ages but this analysis looks at the consequences of this problem for those at an age when it can be really damaging.

“As couples approach retirement, providers become less willing to lend.

“They are almost always reluctant to accept the sale of the property as a valid repayment plan should the mortgage payments become too much of a burden or unexpected costs including care costs begin to eat into their ability to pay.”

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