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​‘Sorry, you’re too old’: Are the lenders guilty of discrimination?

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Australian Broker | 17 Jan 2014, 08:00 AM Agree 0
Brokers are calling on lenders to ditch the hard and fast rules on lending to older borrowers, saying it amounts to age discrimination.
  • Country Broker | 17 Jan 2014, 08:58 AM Agree 0
    ANZ Do not discriminate in most cases , But it is AGE discrimination through and through , many are now working well beyond 60 .
    It would be interesting for a comment to be sought from the LMI's particularly a denial they are age sensitive.
  • Brad Quilty | 17 Jan 2014, 09:46 AM Agree 0
    Very true... it should be an 'acceptable strategy' to sell your house in 10-15 years to downsize. And it should be un-acceptable that lenders can and do discriminate purely on this basis.
  • The Observer | 17 Jan 2014, 10:02 AM Agree 0
    Fundamentally, if you have an owner occupied home that you cannot pay for after your retire, then you have a real issue to address. I am self-employed and I will work as long as I can but some PAYG clients may at a certain age be asked to retire. Each client will have their own circumstances that we need, as brokers, to become familiar with and document. If a client wishes to downsize then this strategy is OK and ASIC even covers this as an example. It is a case of asking the right questions and documenting the answers that should have always be the case pre and post NCCP. Once you are satisfied that the loan is not unsuitable for the client, then simply find the appropriate lender for the client.
  • dpathle | 17 Jan 2014, 10:52 AM Agree 0
    If you see a client - 55 years of age and they bought and sold properties all of their working life. They currently have a $1mil home with a $700k home loan, a car plus C'van (owned outright) and a few other material possessions in their 35 years of working life, earn (H'hold) GPA $110k pa and they are looking to downsize to a $500k home (new loan $200kish) ....what would you do for that client/s? Probably set a home loan for 30 years, not care what is in super, if they had sufficient insurance or estate planning. The problem that most brokers (and the lenders) have, is that they "set and forget". Pushing the lenders to relax on their age discrimination position is an excuse by some brokers to not look deeper into the clients "REAL" needs. What will happen to the 65 year old folks out there with $300k in super (expected to live to 95 like their own parents did), a $1mil home and $200k still in debt. All I can say to them is..... "You had better be good to your kids, because you will need to get their support in approx 20 years" .
  • Old joe | 17 Jan 2014, 10:55 AM Agree 0
    This is the elephant in the room. This has to be addressed. I would like the MFAA to address this issue and release a discussion paper on it so we Mortgage Brokers have some reference material to work with. Can anyone point us with some link on this and also a NCCP reference.
  • grahame hale | 17 Jan 2014, 11:00 AM Agree 0
    I took out a loan with AMP and I was 64 and put the term at 25 years. AMP changed it to 30 years. Either AMP know I am going to live longer or they are hoping I will to pay more interest. Cleaver people at AMP.
  • Legal Challenge | 17 Jan 2014, 11:59 AM Agree 0
    Cant wait for a client to challenge under the Age Discrimination legislation - maybe a class action.
    It goes to the heart of where our nation is going..."I know what's best for you, you don't"....And gee that's worked well in so many non democratic countries.
    So if working to 65 is the limit; should we not under 'responsible lending' now also insist on medical reports for all people 35 and over - as I cant be sure they will live for 30 years.
    Better still, given we now assume everyone is a salaried employee; why don't we just ban self employed home loans for anyone over 35.
    Full credit to ANZ, who are picking up some outstanding self employed clients - latest one has a Net Profit of $200k - but was too old for other lenders - who ironically will lend 95% to someone that has never had a home loan before - no track record.

  • Papery | 17 Jan 2014, 12:29 PM Agree 0
    I think there are still a few lazy or even less skilled Brokers out there who as soon as they hear the age, straight away tell the client they are too old & dont even bother with accepting the client because of the additional effort required to get the deal done.

    Most of the time, providing you understand the Lenders policies & credit standards, it comes down to the the Brokers skill in just being able to write the deal up & present it succinctly to the right Lender.

    Havent we all heard from clients that some other (Banker/Broker/neighbour) told them not to even bother.
  • Perth Broker | 17 Jan 2014, 12:34 PM Agree 0
    Am I correct in assuming that correspondent above -dpathle- is spokesman for a lender. It seems this is the sort of garbage that we do get from lenders. The other problem seems to be that these discrimination decisions on a deal are being made at the entry stage of the application by very junior people who will not refer the deal to someone senior. Unfortunately a lot of senior don't seem to know that this sort of thing is happening.
  • Denise Brailey BFCSA (Inc) | 17 Jan 2014, 01:33 PM Agree 0
    The age range targeted by predatory lending practices devised as selling aids by lenders, has been the root cause of older persons obtaining unaffordable loans by use of Buffer monies. Therefore the clients were being told loan was affordable when clearly it would implode with disastrous consequences when buffer ran out. The Industry needs to perhaps be mindful of rogues inside the banking sector that promote the argument of discrimination for their own interests. Consumers appreciate being told the simple truth about all products especially bank products: you simple cannot afford this loan long term Mrs Jones............Its called integrity.
  • The Observer | 17 Jan 2014, 01:41 PM Agree 0
    Hey "Old Joe" some reference material refer to RG209 pg36 and this deals with downsizing. There is some other excellent guiding information for us in RG209 that some brokers appear to be seeking.
  • MMS | 17 Jan 2014, 01:45 PM Agree 0
    Strange lender inconsistency here give reverse mortgage products
  • dpathle | 17 Jan 2014, 01:49 PM Agree 0
    Perth Broker - I am not an employee of a bank. I left one of the big 4 back in 2000, but have been involved in finance etc.. since 1985 when lending was regulated. My parents are in their 70's..... I, along with many other Australian families, will need to look after my parents financially because the Superannuation, housing investments and other schemes (including the pension) that they invested in over the years will not see them through financially over say the next 20 years. Age discrimination is never going to make its way to the courts with regards to lending, however, lack of responsible lending will.Those of you that are foolish enough to think that lending to a person aged 55 yrs of age for a 30 year loan will hopefully one day see yourself in court being prosecuted for irresponsible lending. Sorry you are too old should not be the title of this article, it should read "Sorry you have been too stupid with your money (planning) for the last 35 working years".
  • Steve | 17 Jan 2014, 03:58 PM Agree 0
    The banks will simply adjust their systems so they dont discriminate on age but the client fails on "credit score". Nobody can challenge then because credit score is great and powerful.
  • SteveL | 19 Jan 2014, 08:30 PM Agree 0
    For god sake can we just let people be responsible for their own actions. I am totally sick and tired of this nanny state we live in. Independent legal and financial advice should well and truly be enough. However it is also up to the funders to make their own rules and be damned about discriminating. Golden rule should apply...whoever has the gold makes the rules. And we should all take responsibility for our actions, decisions and their consequences good or bad!
  • Denise Brailey BFCSA (Inc) | 20 Jan 2014, 10:44 AM Agree 0
    Well SteveL, its sad you see protection for vulnerable people as being a Nanny State. Yes one point of view, but the reasons we have laws is to protect the less informed from exploitation in a given circumstance. As two surgeons said to me: we know how to mend broken bodies but no nothing about financial planning. Yes they were secure and financial strategies put to them by licensed experts saw their retirement in tatters. So many of these stories come across my desk on a daily basis. Its called ethical thoughtlines.
  • SteveL | 20 Jan 2014, 03:44 PM Agree 0
    RE: Denise Brailey, You missed the point. I am all for protecting the vulnerable, and predatory lending is a completely separate issue to this. If a lender offers a loan to someone and the repayments are "X" per month....SURELY they will calculate for themselves whether they can afford those repayments both now and in the future. Oftentimes, these court cases are a case of buyers remorse and the opportunity to deflect responsibility from ones self. Unfortunately, some people make a name and a living giving a voice to those who have made poor errors of judgement yet refuse to take responsibility for their own decisions and actions. Now that is Sad!!!
  • Denise Brailey BFCSA (Inc) | 21 Jan 2014, 11:23 AM Agree 0
    Unfortunately SteveL you do not understand. My files are full of those whose income are $50k and Service calculator calculated $180K. 100% of the people I look after are in this boat. Our integrity does not allow us to defend those who had buyers repmorse and understood the product. Another point is a Give these people a voice freely. My work for 2 decades has been as a volunteer and I have accordingly won state awards by peers for that work. I am simply altering the industry to see another point of view - hopefully. I have no problome with older people asking for a loan and it being approved, providing it is properly and honestly assessed and no service calculator figures added after they signed. Its actually a crime but sadly ASIC is snoozing. I would not do this work unless a need developed. I retired in 2006 and was dragged back into it by media sending me the victims. Just a few details you may wish to hear.
  • Mrsskybum | 03 Feb 2014, 03:10 PM Agree 0
    OK it seems to be a varied approach been taken by the lenders here and I don't agree with some of the comments either. Yes, it needs work to allow 50+ people feel comfortable to apply again as it seems the the general community have the impression that banks are discriminating against them.

    People in their 50's shouldn't be denied the opportunity of been able to refinance their current home loan to a better rate, nor should they have to accept the lenders stance of a shorter term if they have been paying their current mortgage without any problems. I had a client recently that this happened to they had a 30 yr loan term with Westpac but were penalised to a 20 yr term when they refinanced to Suncorp. This is wrong. They had super and life insurance and I can't see why Suncorp took this position.

    The average loan does only last approx 6 yrs. Who's to say a 25 yr old won't be killed or die before the 50 + person, no one knows when your time is up and you can't tell me that a 25 yr old if killed tomorrow would have enough superannuation to payout his loan. So if your going to use this rule make everyone have an exit strategy and be done with it. We are been treated like a nanny state and people can't be responsible for their own problems.
  • Mrsskybum | 03 Feb 2014, 03:21 PM Agree 0
    Yes, there are idiots out there that do stupid things but the general community shouldn't have to pay for it. We shouldn't be treated all the same or treated like we are that stupid that we have to be told what to do and when to do it. Let us make up our own mind whether we can afford the loan or not. With protection out there for the brokers and lenders who do the wrong thing. Allow people to have life insurance, even make it part of the loan conditions if need be. But do it for everyone. I mean some people may with the lotto, get a huge compensation payout, buy and sell there way to pay for the mortgage but most of us would downgrade in retirement anyway. So I can't see the issue with that.
  • SEQ Broker | 01 Apr 2016, 10:39 AM Agree 0
    @DeniseBradley - if you are experiencing files where the borrower in actuality earns $50k but their income has been represented as $180k then that is a completely different area of discussion and you know it. Either the borrower or broker and lender have acted fraudulently and not done due diligence in confirming income. My 55 year old client who already has a 25 year term remaining and is able to make the repayment simply wants a refi to lower his repayment / take advantage of cheap rates on the market - to keep more of his money in his pocket. He is discriminated against because he can not get a 30 or a 25 year term and he needs to evidence a plan to execute the home loan by his 70th birth day. So he is either doing a 15 year term (Very high repayments), keeping his current repayment and missing out on the discounts available (For no other reason than his age) or according to you should he simply give up, sell his house put the money in his super and get his back side into a retirement home now? He is keeping his house, has a further 15 years to reduce the mortgage should he choose and if there is a debt owing against the at that time he will have improved his equity position. Given the average loan only goes for 4 years this is a definitive case of discrimination based on age.
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