Age discrimination: pensioners are often excluded from lending

Status: 27/09/2023, 16:59 p.m.

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Elderly people, like this gentleman here, are apparently often excluded from lending by banks. The Federal Anti-Discrimination Commissioner sees this as a "warning signal". © Stefan Sauer / dpa

Older people in this country often have a harder time getting loans. At least that's according to a new study by the Institute for Financial Services.

Whether it's a loan for a new heating system or consumer and real estate loans, older people in Germany are finding it increasingly difficult to borrow money from banks, according to a study. Age plays a "disadvantageous role" in lending practices, according to the study by the Institute for Financial Services (IFF). The Federal Anti-Discrimination Commissioner, Ferda Ataman, sees this as a "warning signal", as she explained on Tuesday.

For the IFF research project, which is funded by the Anti-Discrimination Agency, banks and insurance companies were asked whether and in what way age serves as a criterion for establishing loan agreements. A total of 100 credit institutions were surveyed, including 35 public institutions, 33 private commercial banks and 32 cooperative banks.

Increased risk of death and long-term care: reasons for discrimination

55 percent of those surveyed confirmed the existence of age limits when granting consumer loans. In the case of real estate loans, as many as 71 percent affirmed this.

41 percent of respondents also stated that there are age limits for applying for a consumer loan, which are on average 67 years. In the case of real estate loans, 57 percent of respondents said this significantly more. Here, too, the average age limit is 67 years.

As a reason for this practice, the authors of the study cite the fact that it is widely assumed by financial institutions "that the probability of repayment decreases with advancing age". The reasons for this are "for example, the reduced income at retirement age, the increased risk of death and the increased risk of long-term care".

Corona and branch closures worsened the situation

Reactions to this are therefore "partial age limits and the necessary conclusion of a residual debt insurance". But residual debt insurance can also lead to age-related disadvantage - namely if it is no longer sold at a certain age, but at the same time it is a prerequisite for some of the providers to lend to older people.

And there is another factor that has a potentially disadvantageous effect: Due to the increasing number of branch closures, accelerated once again by the Corona crisis, "access to advice is more difficult, especially for older borrowers," the study continues.

In addition, the study points out that loan applications from older people are often rejected without individual checks. The reason given for this is the increasing standardization of lending, additionally driven by digitization and the increasing brokerage of loans by third parties, such as online portals.

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Federal anti-discrimination commissioner alarmed

The anti-discrimination commissioner Ataman is therefore also alarmed. "Banks should continue to be able to decide for themselves under what conditions they grant loans," she explained. "But blanket rejections because of age - they are wrong," she added. Because this could, among other things, lead to the fact that older homeowners, who would have to renew their heating, for example, would have serious problems, warned Ataman in the newspapers of the editorial network Germany (RND).

Older people need the opportunity "to get money with appropriate collateral," demanded the anti-discrimination commissioner and suggested that the General Equal Treatment Act be amended in order to prevent blanket rejections of loans due to age in the future. In addition, banks should have to justify refusals of loans more transparently in the future. (AFP, LF)