Mortgage Ban for Seniors Raises Questions About Age Discrimination

An investigation raises questions about how banks treat older borrowers. Information shows that people who have passed the age of 60 may have a harder time obtaining mortgage pre-approval, despite good finances and low debt levels. Critics argue that these routines risk disadvantaging older customers and bring the issue of age discrimination on the credit market to the forefront.

In an investigation by SvD, a 62-year-old man was denied a mortgage pre-approval from Skandiabanken, despite having a substantial down payment and already being a mortgage customer with the bank. The man planned to buy a home for seven million kronor and finance half of the purchase price with his own capital.

Several other banks gave the green light for the purchase, but Skandiabanken said no. When the man contacted the bank’s customer service for an explanation, he received a response that clearly linked the decision to his age.

“I can see that you have applied for a mortgage pre-approval. From the year you turn 60, our credit system calculates with 60 percent of your reported income. In your case, this results in a deficit in the calculation,” the bank’s customer service wrote.

This means that the declared income is automatically reduced by 40 percent in the initial assessment when the customer has turned 60.

The Bank: Age Does Not Affect Credit Decisions

At the same time, Skandiabanken points out that age should not affect the final credit assessment. Jonatan Ohlin from Skandia’s press service states, when asked by SvD, that the bank always makes an individual credit assessment and never takes age into account. However, when confronted with the customer service response, he admits the wording may have given the impression that age was a factor.

– With the wording the customer received in our contact, it gives the impression that this is about age, and that is a formulation I really regret.

Asked whether the response could be interpreted in any other way, he replies that it is unfortunate that it was worded in a way that could give the impression that the customer’s age is factored into creditworthiness. The bank argues that the loan pre-approval is only a preliminary assessment and that the customer can later supplement their information in connection with a full mortgage application.

– Yes, and it is really unfortunate. I understand that the customer who received this feedback is not satisfied, and I regret the way it was formulated. The loan pre-approval is an initial assessment, and we will now review how we can make it clear to our customers what actually forms the basis of the credit evaluation, says Jonatan Ohlin.

Other Banks Use Different Models

SvD has also asked several of the country’s largest mortgage lenders whether they use standardized models linked to customers’ ages. SBAB states that the bank uses age-related standardized calculations in its digital application process, but customers who wish to borrow more can contact the bank for an individual assessment.

Swedbank, on the other hand, says it lacks general age formulas, although sometimes consideration is given to the fact that finances can change after retirement. SEB emphasizes that the assessment is based on the customer’s overall financial situation and the so-called “left-to-live-on” calculation, not the customer’s age.

Financial Supervisory Authority: Individual Assessment Required

The Financial Supervisory Authority emphasizes that lenders are required to make individual assessments of each customer’s repayment ability.

– Banks must always make an individual credit assessment, taking into account the customer’s specific financial situation, and not rely on automatic standard calculations. In practice, this means that the bank must make a corresponding assessment at the pre-approval stage, says Vidar Lindgren of the Financial Supervisory Authority’s press office to SvD.

This statement brings up the question of how far automated models may go before they risk treating customers differently based on factors that do not reflect their real financial situation.

Age a Protected Ground for Discrimination

The issue is particularly sensitive since age has long been a protected ground for discrimination under Swedish law. The Discrimination Act prohibits discrimination based on age in the same way as discrimination on the basis of gender, transgender identity or expression, ethnicity, religion or other belief, disability, and sexual orientation.

This does not mean age can never be taken into account when making decisions, but it requires that differential treatment be objectively justified and proportionate. When automated systems or formulas lead to older people receiving worse opportunities than others with similar finances, questions arise as to where the boundary lies between risk assessment and unlawful discrimination.

As more Swedes continue to work later in life, have high incomes even after 60, and often own significant assets, age as a factor in banks’ credit assessments becomes increasingly significant. The case highlighted by SvD suggests that many customers feel age plays a greater role than banks publicly admit, and possibly more than the law allows.