The National Australia Bank (NAB
) has brought in stricter regulations for older property buyers seeking to take out a home loan.
The new guidelines apply to mortgage brokers and other third parties offering white-label loans through NAB
’s wholesale funder and distribute Advantedge Financial Services.
“Where a borrower or co-borrower will reach 70 years of age prior to the expiry of the loan term … you must be able to establish how the borrower will be able to meet repayments upon retirement for the remainder of the loan term,” the new policy is reported as saying.
This strengthens the bank’s current regulations which ask brokers to establish how borrowers of 60 years old will meet mortgage payments upon retirement.
A spokesperson from Advantedge told Australian Broker
that the lender was committed to responsible lending and having detailed discussions with customers. The overall point of the policy was to initiate conversations with borrowers around proper lending practices.
“Age does not affect a customer’s loan application. Through this policy, we are simply seeking to understand their financial capacity to repay their loan upon possible retirement – for example, they may say they will have paid off their loan, or plan to sell their asset, or they will have adequate funds to continue meeting their repayments,” she said.
However, the Australian Financial Review
has reported that certain lawyers and aged groups have said the restrictions might be discriminatory.
“This issue is ability to repay a loan, not age. It should not matter whether someone is 40 years old, or 50 or 70 if they are able to service their borrowings,” Ian Yates, chief executive of Council On The Ageing (COTA), told the AFR
Alex Grayson, a senior associate at Maurice Blackburn, also spoke to the paper, saying that section 28 of the Age Discrimination Act made it unlawful for a provider of goods and services to discriminate against an individual “on the grounds of the person’s age”.
“Consideration of a loan application should be about an applicant's ability to service a loan and capacity to make their repayments, regardless of their age,” she said.
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