That’s what they say, and many people live by it and apply it to certain aspects of their lives.
However when it comes to obtaining a mortgage or remortgage, age isn’t just a number. Lenders have long been wary to lend to older borrowers as they seem them as a riskier prospect once they retire. Now you might expect that it’s the over 50s who are affected the most, but it appears that those in their 40s are also being rejected.
A recent study by one building society found that 17% of customers had been rejected for a mortgage and or remortgage because of their age. This rose to just over one in five among borrows aged 45 to 54. With the average age of first-time buyers rising, this overly cautious approach by lenders is baffling.
It’s a problem that has caught the attention of the Financial Conduct Authority who launched a review into financial age discrimination launched at the end of February.
The insurance industry does count age as a risk factor when pricing certain types of insurance. This was questioned back in 2012 when the European Court of Justice ruled that insurers could no longer use gender to price business. However the Home Secretary confirmed that the age discrimination laws contained in the Equality Act would not apply to insurers. At the time groups such as Age UK and the National Pensioners Convention complained bitterly.
On the surface, charging people of a particular age more for insurance looks like discrimination – but it is different. The products that insurers sell are not a commodity and the very nature of the product means that pricing has to reflect the risk the insurer is assuming. If one group of the population is a greater source of risk, then it is common sense that this group should attract a higher premium. And the age issue works at both ends of the scale. While older people may have to pay more for, say, travel insurance, they may well be charged lower prices for motor insurance while those aged between 17 and 25 can face premiums running into the thousands.
It’s also important to remember that age is just one item on a long list of other considerations insurers use when pricing policies. Also the world is changing and insurers are making increasing use of their access to numerous data sources to tailor pricing to the individual policyholder.
However that hasn’t stopped speculation that the lawmakers may change their mind and decide that financial age discrimination is unfair when it comes to insurance. It will be interesting to see the outcome of the FCA’s review as that may well impact insurers as much as it may impact lenders.
Brian Coulton is head of sales at Source Insurance