Families could be offered “multi-generational” 50-year mortgages allowing parents to pass on outstanding debt to their children, under plans being considered by Downing Street.
Boris Johnson revealed that he wants lenders to offer extra-long mortgages as a way of getting more people onto the property ladder.
The prime minister told reporters that he was keen to find “all sorts of creative ways to help people into ownership”.
No 10 is understood to be looking at ways to create a market for intergenerational mortgages, letting buyers borrow over terms of 50 years – or even longer – if offspring are signed up to inherit property and pay the rest of the loan.
The proposal would allow more people to buy a house in their forties and fifties, knowing they would not have to finish paying it off during their lifetimes.
It could also let more buyers keep moving into bigger homes, if they are able take out larger loans over longer time-frames.
Asked if he was considering intergenerational mortgages that could passed from parents to children, Mr Johnson replied: “Yes, certainly.”
The PM also said he was keen to see more 95 per cent mortgages, having vowed 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,” said Mr Johnson.
However, housing experts warned that the idea of intergenerational mortgages was risky and would probably 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 would need to be affordable for all the original applicants and also the children who inherit it,” said Graham Taylor of mortgage broker Hudson Rose.
“Otherwise, the children could risk inheriting a liability they are unable to manage which, when secured against your home, has catastrophic consequences,” he added.
Japan created a market for mortgages with terms of up 100 years in the 1990s in an effort to boost the ailing property market. But Mr Taylor said they were viewed as merely “an inheritance planning tool for the wealthy”.
Jamie Lennox, director at Dimora Mortgages, dismissed the cross-generational plan as “another smoke and mirror idea which is unlikely to help the masses”.
He said intergenerational mortgages would only “benefit people with more affluent families that have high incomes or large assets in the first instance”.
Urging the government to get more houses built, Mr Lennox added: “Until more houses can be built quicker to curb the supply and demand issue we have, the percentage of young people getting onto the housing ladder will keep reducing.”
