The study noted that having a borrower die could be “costly to the lender,” thus the rate of rejections significantly increased each year after the age of 70. Study finds that older mortgage applicants are more likely to be rejected:
study analyzing 5 million single-borrower loan applications from 2018-2020.
For instance, the rejection rate for mortgage applicants between the ages of 50 and 59 was 1.07 percentage points higher than those between 18 and 24. The rate was 1.54 percentage points higher for folks between 60 and 69 and 2.7 percentage points higher for applicants over 70.The study also found that rejection rates accelerated every year after the age of 70, spiking to 12% by the age of 90.
“Insufficient collateral is also consistent with older applicants who are forced to carry a mortgage into retirement being more financially distressed, as they may lack the funds to pay for adequate maintenance,” the study found.The rate of rejections also significantly increased each year after the age of 70. The study noted that having a borrower die could be “costly to the lender” increasing the likelihood of the loan being paid off early or entering foreclosure.
According to Sharon, older applicants often have better credit and equity – making it easier for them to navigate a refinance or new purchase. However, being on a fixed income can present its own set of hurdles when a lender evaluates an applicant's debt-to-income ratio and whether additional assets will be needed as collateral.
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