Homes & Money: Can pay, will pay

More and more mortgages are being taken out by women. Nic Cicutti takes a look at what lenders are offering them

Despite the continuing drive by lenders to win prospective homebuyers to their sophisticated range of mortgage products, they have traditionally tended to ignore one potential group of borrowers - women.

The reason for such an "oversight" owes much to the traditional view of women's role in society. Until recently, they have always tended to be seen as secondary figures in the mortgage-lending game.

They were regarded as passive partners to the men in their lives, who took responsibility for choosing the right mortgage, associated financial trimmings and then paid the bills.

Such views no longer hold water. More women are in work than ever before.

Moreover, within the next 10 years, the proportion of women aged between 25 and 35 in work is expected to increase to 81 per cent, up 10 percentage points on the situation today. Women's pay is rising as a proportion of men's, albeit slowly, from 63 per cent in 1979 to more than 72 per cent today.

Aside from income, the increased importance of women within the mortgage market comes from changes in general living patterns.

Fionnuala Earley, a senior economist at the Council of Mortgage Lenders (CML), points out: "Higher levels of further education provide greater opportunity for financial independence and the ability to set up home alone at an earlier age."

This, coupled with a growing tendency for women to get married and to have children later in life, means they are more likely to be seeking a mortgage, particularly now that the housing recession seen in the past few years appears to be over.

Ms Earley adds: "There has also been an increased incidence of divorce, which has added to the numbers of households headed by women. [Estimates] suggest this will continue in the future, with the percentage of divorced women expected to increase to 14 per cent by 2020, compared to only 7 per cent in 1992."

Figures from mortgage lenders themselves underline the growing importance of women as borrowers. Last year, 16 per cent of all mortgages were made to women on their own, compared to 8 per cent in 1983.

Figures from the recent Survey of English Housing show that while women, who tend to earn less than men, pay a greater proportion of their income towards their mortgages, they are also less likely to default on payments. Eighteen per cent of men found it hard to meet their mortgage payments, compared with 11 per cent of women.

While most mortgage lenders accept, at least at face value, the growing role of women in the mortgage market, the key question is one of whether specific packages need to be designed for women on their own.

Charles Crouch, a Woolwich spokesman, says: "We do not discriminate between men and women in our mortgage lending. All our loans are available to males and females on equal terms. Generally, there does not appear to be any difference in the type of loan taken out by single men or women.

"One area where we do look specifically at women's needs is where we are considering applications from women who are pregnant. If an application is made by someone who is about to have a child, providing they are going back to work, we are prepared to take their income into account at the assessment stage if they are planning to go back to work. We would want to know that they are on proper maternity leave, though."

Perhaps as significant as single women buying their own home is the significant tendency for today's mortgages to be based on the joint earnings of couples taking out a loan.

Ms Earley says: "It is important to remember that increased economic activity among women will also have had an effect on their contribution to joint mortgages.

"Even where the mortgage is in the sole name of a male partner, the female income may be a important factor in the household.

"[This] has important implications for the mortgage market. The ability to manage payments is now more likely to be sensitive to female income and job prospects.

"Consequently, some lenders may be genuinely concerned about the ability of couples to continue to meet mortgage payments should they decide to start a family."

In the past two years, dozens of lenders have launched so-called "flexible" mortgages, based on the premise that borrowers should be allowed to take payment "holidays" for periods of up to nine months. In other cases, payments can be scaled down or increased at will, depending on circumstances.

Mr Crouch says: "These days, more and more mortgages are taken out with two rather than one income and either party could stop work.

"We designed our FlexiMortgage to enable borrowers to have repayment breaks for whatever reason. If a woman gets pregnant it's not necessarily her that takes time off; we do get role reversals.

"The opportunity is there, whatever the circumstances."

Despite the trend towards greater lending equality, lending experts warn that there is still a need for women to take several additional factors into account.

Alan Mudd, sales manager at John Charcol, the UK's largest mortgage broker, says: "If women buy on their own, particularly where they are borrowing up to the limit of their earnings, they should make sure they can afford the mortgage if interest rates go up. This can be painful if a woman has taken out a discount or fixed-rate mortgage.

"They should consider carefully the type of loan they take. For those who are cautious, repayment mortgages may be the best option. Also, women tend to be less fascinated by the prospect of endless DIY than many men. They should be prepared to get a far more detailed valuation or survey of the property to ensure there are no hidden problems with it.

"If they are buying property with a partner, they should always take out a joint tenancy or tenancy in common should they split up at a later date."

One potentially frightening experience for many women is that ofmeeting the full cost of a mortgage when their relationship ends.

Mr Mudd adds: "The advice we would give is that in a dispute with a co- borrower you should immediately advise the lender of developments. The more information they have the more sympathetic they will be."

Although Mr Mudd opposes specific marketing aimed at women, he agrees with the argument for more flexibility to take women's needs into account. "When you consider that a home is often the greater part of the borrower's personal wealth, providing something that meets people's needs, whether men or women, ought to be the aim of any mortgage lender."

MoneyFacts, a monthly guide to investment and mortgage rates, also carries a list of flexible mortgages. For subscription details, call 01692 500765.