Most lenders restrict lending than runs over a certain age, as maximum age limits stand at 75 for the three largest building societies: Nationwide, Yorkshire and Coventry.
The Building Societies Association, whose members have been consulting with the Financial Conduct Authority, is releasing an interim report called 'Lending into Retirement' which makes a number of recommendations regarding how the industry should change.
There are nine recommendations in all, as the report also calls for suitable housing options for homeowners looking to downsize, regulation which encourages innovation and a cross-industry alliance with other bodies focusing on older consumers.
Dick Jenkins, chair of the BSA, said: “We have been working together as a sector to look at this issue and we are making some early recommendations for change.
“Some put the ball firmly in our court; others can only be delivered in partnership and a few may require regulatory change.
“The FCA has been involved in this preparatory work and I’ve been impressed with their open-minded and participatory approach.
"We have also sought the views of many others and these will now contribute to the next stage of the project, to deliver progress for those who want, need and deserve to buy a home of their own into and in retirement.”
The BSA’s research found that half of 25 to 34 year olds think they will need a mortgage that lasts into retirement, as the average age of unassisted first-time buyers has risen to 31.
The UK has 11.6 million people over the age of 65, while by 2034 over-65s should make up around a quarter of the population.
Paul Broadhead BSA head of mortgage Policy, added: “It is natural for the building society sector to kick-start and lead this work. We already tend to have a more flexible approach to lending with higher and sometimes no age limits and a willingness to assess applications considering an individual’s circumstances.
“As the average age of a first-time buyer continues to increase, borrowing into retirement is becoming increasingly commonplace, rather than a niche form of lending.
“This report identifies a number of areas that need further attention if we are going to meet the inevitable growth in demand for borrowing into, and in, retirement.
“The time is right to review lending policies, examine how advice is provided and to work closely with a range of organisations across different sectors to ensure that lenders are equipped with the appropriate tools to respond to the rapidly changing demographics across the UK.”
