Ageism can rear its ugly head at any moment and take many shapes and forms as well. We all know about alleged ageism pushing some people out of work. Ageism may be one of the newer forms of discrimination, but unfortunately, it is here to stay in the workforce. But, does ageism also exist in the housing market?
While there isn’t an exact science to measure this new phenomenon, there certainly are signs of ageism when it comes to mortgages. Nearly thirty percent of brokers say they expect the number of over-40s to have issues securing home loans this year. And, that number may only be on the rise in the future.
First-time buyers are an average age of 31, per Halifax and referenced here. This means most people are likely to pay off their mortgage around their mid-50s or early-60s. Lenders are very hesitant about home buyers over the age of 40 because they are not crazy about the idea of lending to someone who is in the midst of retirement. For lenders, this practice more likely qualifies as realism, rather than ageism.
But, in just the past two years, seventeen percent of prospective buyers who have been turned away, say that age has been a factor. 45-54-year-old buyers are even more likely to believe their age has been a reason why they did not receive a mortgage or remortgage. These lenders are cautious of age because of the possibility that the buyer will have an outstanding debt even after they have stopped working and earning an income.
Is this an oversight by most lenders? Many older people will receive a state and/or private pension after they leave the workforce. Pensions are more secure than a salary, which can stop at any time due to a firing or resignation. People are now working longer as well, something that appears to not have been considered by most lenders.
The demographic for first-time home buyers in the United States, has changed drastically in the past forty years as found here. Most first-time buyers are renting for an average of six years before buying a home, compared to a 2.6 year average back in the 1970s. In addition, first-time buyers are less likely to be married than they were forty years ago. That number has significantly decreased since the 1980s, when 52 percent of first-time home-buyers were married. Nowadays, that number is down to 40 percent. This fact also makes paying off a mortgage more of an uphill climb for buyers.
Good news could be on the way for older home buyers thanks to the Council of Mortgage Lenders and Building Societies Association. Both groups are currently working to soften the demands of some lenders on older buyers. Another factor that could make it easier to buy is a borrower’s expected retirement age rather than their age eligibility for a state pension, since this could be a much younger age. Poor credit history remains the biggest reason for a mortgage refusal, so, if older first-time buyers can keep a good credit score, than ageism in the housing market could be washed away for good.