Families could be offered “multigenerational” 50-year mortgages, allowing parents to pass on outstanding debts to their children, under plans being considered by Downing Street.
Boris Johnson has revealed he wants lenders to offer very long mortgages as a way to get more people onto the property ladder.
The prime minister told reporters he was keen to find “all kinds of creative ways to help people own property”.
Number 10 is understood to be looking at ways to create a market for intergenerational mortgages, allowing buyers to take out loans over a period of 50 years – or even longer – if offspring are signed up to inherit property and pay off the balance borrows.
The proposal will allow more people to buy a house in their forties and fifties, knowing they won’t have to pay it off in their lifetime.
It may also allow more buyers to continue moving into larger homes if they are able to take out larger loans for longer time frames.
Asked if he was considering intergenerational mortgages that could be passed down from parents to children, Mr Johnson said: “Yes, of course.”
The Prime Minister also said he wanted to see more 95 per cent mortgages after pledging to turn “generation rent” into “generation buy” as part of a review of the mortgage market launched last month.
“We need young people to have the confidence, to have the deposits, the mortgage packages, to be able to get into ownership,” Mr Johnson said.
However, housing experts have warned that the idea of intergenerational mortgages is risky and likely to be taken up only by wealthy people who can offer strong guarantees.
“On the face of it this seems like a great idea, but the problem remains that the loan has to be affordable for all the original applicants and also for the children who inherit it,” said Graham Taylor of mortgage broker Hudson Rose.
“Otherwise, children may risk inheriting a liability they are unable to manage, which, when secured against your home, has catastrophic consequences,” he added.
Japan created a mortgage market with maturities of up to 100 years in the 1990s in an attempt to boost the ailing property market. But Mr Taylor said they were seen simply as “an estate planning tool for the wealthy”.
Jamie Lennox, director of Dimora Mortgages, dismissed the intergenerational plan as “another smoke and mirrors idea that is unlikely to help the masses”.
He said intergenerational mortgages would “only benefit people with wealthier families who have high incomes or large assets in the first place”.
Urging the Government to build more houses, Mr Lennox added: “Until more houses can be built faster to curb the supply and demand problem we have, the percentage of young people getting on the housing ladder, will continue to decline.”
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