The Financial Ombudsman has criticised HSBC after the bank refused a couple in their 40s a £250,000 mortgage because the husband would have been over the age of 65 when the 18-year deal finished.
In the first case of its kind, the banking industry watchdog ordered HSBC to pay the couple £500 for their “distress and inconvenience” over the “unfair application of its age policy”.
Although the bank argued it was “entitled to apply a maximum age policy”, the watchdog told it to reconsider their loan application.
The ombudsman said: “The bank relied on untested assumptions, stereotypes or generalisations in respect of age.”
The couple, who do not wish to be named, applied for a joint interest-only mortgage on their home, in which they held substantial equity.
HSBC first indicated it would be prepared to lend the money, but then refused to proceed due to the husband’s age.
The couple said they had been victims of discrimination because the husband does not plan to retire at 65 and his final salary pension would be enough to cover the monthly repayments. His wife would also have been able to pay the loan from her income alone, if necessary.
The bank, like other lenders, does not offer interest-only loans with a term beyond a borrower’s 65th birthday. For repayment mortgages, the age ceiling is 75.
It said: “As a responsible lender, we need to ensure our customers’ ability to repay their mortgage.
“Regulatory requirements to show responsible lending and the repayment vehicles associated with interest-only loans have become more stringent since this application was made.
“It’s important to stress that when we look at a mortgage application we take a number of different factors into account, which includes assessing each customer’s individual circumstances.”