From the gleaming towers of Singapore to the countryside cottages of the United Kingdom, older borrowers aren’t just tolerated; they’re actively courted by lenders who understand that age doesn’t determine creditworthiness. While Sri Lankan banks remain trapped in outdated policies that effectively discriminate against anyone over 50, the rest of the world has moved on, creating flexible, dignified pathways for seniors to access home loans.
Role of the Central Bank and the Government
The Central Bank of Sri Lanka has failed in its fiduciary duty by not directing financial institutions to refrain from arbitrarily denying home loans, solely on the basis of age. The Ministry of Finance, therefore, the government, is equally responsible for this failure.
This regulatory vacuum enables systematic discrimination against creditworthy older citizens, contradicting modern banking principles and harming an ageing population desperately needing progressive, not punitive, financial policies.
The Global Picture: Where Age is Just a Number
Many advanced economies, such as the United States and Canada, etc., there is no maximum age limit, whatsoever, for obtaining a 30-year mortgage. The Equal Credit Opportunity Act explicitly prohibits age discrimination, meaning an 80-year-old American can walk into a bank and apply for the same three-decade loan term as a 30-year-old, provided they meet income and credit requirements. Lenders evaluate based on current financial stability, not birth certificates. A 65-year-old Canadian with a solid pension can secure a mortgage extending well into their seventies, with the understanding that income, not age, determines repayment capacity.
Australia sets the typical retirement age benchmark at 65-75, and borrowers, over 65, can still obtain mortgages by demonstrating an exit strategy; a credible plan for repayment that might include downsizing, superannuation funds, or ongoing retirement income. The system acknowledges that life doesn’t end at 60, and neither should financial opportunity.
Global Home Loan Conditions:
A Comparative Analysis
The following table ranks countries from most to least affordable for older home loan applicants, based on maximum age limits, flexibility of terms, and accessibility of financing (Table 1).
What Makes These Systems Work?
The countries at the top of our affordability ranking share several key characteristics. First, they recognise that retirement doesn’t mean financial incapacity. Banks in these countries evaluate total financial health, not just employment status.
Second, they embrace the concept of exit strategies, in Australia, for instance, acceptable exit strategies include downsizing property, selling investment assets, or using superannuation (retirement) funds. These strategies are actually considered and evaluated, not dismissed out of hand. Australian lenders assess whether someone’s superannuation balance is sufficient to clear the debt, or if their investment property provides adequate cash flow. It’s a conversation, not a closed door.
Third, many of these countries offer specialised products for older borrowers. The UK, for example, has retirement interest-only mortgages where borrowers pay only interest during their lifetime, with the principal cleared when the property is eventually sold.
Australia provides reverse mortgages for those aged 60 and above. Under this arrangement, the bank pays the homeowner, rather than the homeowner paying the bank, using the house as security. The full outstanding balance is then recovered when the property is eventually sold.
These may not be perfect solutions, but they represent creative thinking about how to serve an ageing population’s housing needs.
The Hidden Cost of Age Discrimination
Sri Lanka’s rigid age-60 cutoff carries consequences that ripple far beyond individual borrowers. In a nation where life expectancy now exceeds 77 years, we’re telling people they are 17 years of ‘too old’ to be trusted ahead of them. This isn’t just unfair; it’s economically counterproductive.
Consider the broader impact. Sri Lanka has one of Asia’s fastest-aging populations. By 2050, one in four Sri Lankans will be over 60. These aren’t economic liabilities; many are professionals with decades of experience, stable incomes, and substantial assets. A 58-year-old doctor with thriving practice and pension security poses less default risk than a 28-year-old in an uncertain job market, yet our banking system treats them as if the opposite were true.
Learning from Singapore: A Regional
Success Story
We don’t need to look to distant Western nations for alternatives. Singapore, our regional neighbour facing similar demographic challenges, has crafted a more balanced approach. While Singapore’s Monetary Authority hasn’t imposed a hard age limit, banks do apply careful scrutiny to loans extending past age 65.
A Singaporean borrower, over 65, can still obtain financing, but with reduced loan-to-value ratios. If you’re buying a property worth one million dollars and you’re under 65, you might borrow up to 75 percent. Over 65, that drops to 60 percent. It’s more conservative, certainly, but it preserves opportunity.
This approach acknowledges risk without eliminating possibility. It says to older borrowers: Yes, we’ll lend it to you, but we need you to have more equity in the game. Compare this to Sri Lanka’s approach, which effectively says: “We don’t care how much equity you have or how stable your income is, you’re too old”.
A Path Forward for Sri Lanka
This protects banks from excessive risk while allowing creditworthy older borrowers to access financing. It’s a middle ground that respects both prudent lending standards and individual dignity.
Additionally, Sri Lanka could develop specialised products for its ageing population. Retirement interest-only loans, similar to those in the UK, could serve retirees who have substantial home equity but limited monthly income. Reverse mortgages, properly regulated with strong consumer protections, could help elderly Sri Lankans tap into home equity without monthly payments.
Beyond Banking: A Cultural Shift
Ultimately, changing Sri Lanka’s approach to older borrowers requires more than policy adjustments; it demands a cultural reckoning with how we value our ageing citizens. The countries that lead in age-friendly lending, the United States, Canada, Australia, share a broader commitment to recognising that people can remain economically active and financially responsible well into their later years.
These nations have moved beyond viewing retirement as an endpoint and recognised it as a transition. A 65-year-old today might have 20 or more active years ahead, years in which they’ll continue working part-time, managing investments, drawing stable pensions, and yes, making mortgage payments. Our banking sector needs to catch up to this reality.
Conclusion: Time for Change
As our table demonstrates, Sri Lanka stands alone at the bottom of the global ranking for age-friendly home lending. We’re more restrictive than Turkey with its 15-year maximum terms, more inflexible than Singapore with its sliding loan-to-value scales, and incomparably more rigid than the United States, Canada, or Switzerland, where age barely factors into lending decisions at all.
This isn’t about being soft on risk or abandoning prudent lending standards. Countries with no age limits still assess income, evaluate debt-to-income ratios, and verify creditworthiness. They simply don’t use age as a crude proxy for financial competence. The initiative lies with the Ministry of Finance, which must direct the Central Bank accordingly.
For Sri Lanka’s 58-year-old aspiring homeowner, the current system isn’t just frustrating; it’s a form of systematic discrimination that would be illegal in most developed economies. As our population ages and life expectancy increases, maintaining this policy becomes increasingly untenable. The question isn’t whether Sri Lankan banks will change their approach to older borrowers, but when and how many dreams will be deferred or destroyed in the meantime.
The world has shown us better ways forward. It’s time Sri Lanka joined the 21st century in recognising that 60 isn’t the end of financial opportunity for many, it’s just the beginning.
(The writer, a senior Chartered Accountant and professional banker, is Professor at SLIIT, Malabe. The views and opinions expressed in this article are personal.)
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