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Make way for ‘mates mortgages’

Make way for ‘mates mortgages’

Category: Mortgages

Updated: 06/07/2011
First Published: 06/07/2011

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Housing Minister Grant Shapps has entered the debate on how to stimulate the first time buyer market by telling lenders they should offer 'mates mortgages'.

The call came at the minister's second housing summit, where he said that there should be options for friends to combine their funds to secure a footing on the property ladder.

Such products would allow friends to pool together their money, enabling them to raise the necessary deposit.

The Housing Minister said that for groups of friends without access to the Bank of Mum and Dad, 'mates mortgages' could become a mainstream alternative to years of saving.

The scheme could also provide a boost to the UK 's struggling housing market.

"If there are mates who are perfectly capable of paying monthly mortgage payments but are struggling to fund a deposit on their own, there should be straightforward options to unite with their friends and take the first step onto the housing ladder together," said Mr Shapps.

"That is why I have once again called on key figures from across the housing market to come together and discuss ways to improve the availability of mortgages, and how existing products can be promoted much better."

Mr Shapps also praised a number of new innovations and products that have been made since the last housing summit, including mortgages jointly developed by lenders and housebuilders, the Government's FirstBuy scheme and better communication within the sector.

In addition, lenders were called on to replicate the Lloyds Lend a Hand scheme, where the mortgage is guaranteed by the buyers' families.

Many first time buyers have struggled to buy their first home since the economic crisis, with the average age of somebody buying a property for the first time rising into the 30s.

It has helped swell the number of people in private rented accommodation in the UK .

Figures from Communities and Local Government show the number of private renters have risen from 2.15 million in 2003/04 to 3.35 million in 2009/10.

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