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Zurich There is widespread fear among retirees that they can no longer pay the mortgage on their home after retirement because their income drops off considerably. The concern is not baseless, as recently showed a study of VZ Vermögenszentrum. It appears that more than one in three retirees must take austerity measures to make it affordable. At every fifth, credit is difficult to sustain.
The calculation of wear resistance poses the problems of many older people. Banks check if the income is enough to finance a mortgage. The rule of thumb is that the cost of the loan should not exceed one third of the income, with an imputed interest rate of 4.5 to 5%.
Some banks would like to relax this rule. Raiffeisen's former boss, Patrik Gisel, caused a stir two years ago, saying the guidelines were "too cautious". And suggested reducing the interest rate charged to less than 4%. The financial market authority Finma did not appreciate this proposal and hissed the bank.
New regulation on "Equality for retirees"
But Raiffeisen does not seem to have abandoned the idea of weaving with retirees. The Bank has set up this year a new scheme "from pensioners' equality to workers". Normally you go into calculating the gross income portability, says Raiffeisen spokeswoman Angela Rupp – that is, the income before any deductions. This is comparable to pension income – that is, income from AHV, pension and capital – but not individually. "For retirees, we are moving to 38% utilization, almost offsetting the difference in gross income," says Rupp.
This means that the cost of the mortgage can exceed one-third of the income in these cases. How many customers benefit from this regulation, does not seize the bank. One thing is clear: Raiffeisen is the leader in the mortgage market with a volume of 178 billion francs. While the big banks are increasingly reluctant to grant loans in recent years, the volume of Raiffeisen has almost doubled since 2008. Raiffeisen is not that special rules for older customers. "For pensioners, we expect a theoretical gross income," said Lorenz Heim, mortgage expert at VZ Vermögenszentrum. On retiree income, a 10% surtax is applied to balance it with the workforce. The practice was "not very widespread", they only come in borderline cases.
In case of loan, the exceptions increase
According to a spokesperson, at UBS, the portability rules are "the same for all types of borrowers". In principle, there is no reason for termination if the calculated portability is not indicated, if the customers are not late in the payment of interest and depreciation. Basler, Berner and Zürcher Kantonalbank also apply the same criteria for retirees as for employed persons. In some cases, such as stable revenues or low loans, loading capacities greater than 33% would be accepted. The ZKB goes exceptionally up to 40%.
Donato Scognamiglio, head of IAZI real estate consultants, also observes "a certain tendency to extend the rule of affordability". As the baby boomer generation retires in recent years, the issue has become urgent for this group. According to Scognamiglio, there is nothing wrong with granting exemptions to retired owners with large loans. However, some banks may weaken the portability rule so as not to encounter so many cases of "policy exceptions" – cases in which the bank's internal lending rules are wiped out. These exceptions must be documented by the banks and reported to Finma. Over the last five years, the number of owner-occupied dwellings has increased steadily. In 2017, the portability rule was removed for almost every second mortgage.
For retirees, there may be good reason to make an exception, said Finma spokesman Tobias Lux, who would often have more flexibility because of the situation of his assets. However, it remains important for banks to consider what mortgage costs their customers could sustain over the long term, regardless of their age. Finma remains skeptical about a general relaxation of sustainability standards.
* This article was published on November 25, 2018 in the SonntagsZeitung.
(Sunday newspaper)
Created: 26.11.2018, 13:43
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