Mortgage experts said the idea could bring some benefits, but identified problems including the potential for children to go into debt and the fact that it would not address the fundamental issue of housing supply. Under the plan being considered by No 10, a longer mortgage period would allow people to borrow larger sums, with the ability to roll over the debt, although it remains unclear what government action would do this. Other housing ideas being considered by Downing Street include trying to free up state land for rapid house building and investigating whether institutions such as schools could build homes for key workers at prices outside local areas. Boris Johnson, speaking to reporters during his trip to the NATO summit in Madrid this week, confirmed that the idea of 50-year mortgages was being considered, saying the government “wants to find all sorts of creative ways to help the people to acquire property’. . He said: “Last year we had 400,000 first-time buyers. That’s a great number, we’re starting to turn the tide, but it’s critical for this government and our overall economic story if these numbers continue to be strong. “We need young people to have the confidence, to have the deposits, the mortgage packages to be able to own property. If you’re good enough to pay a lot of rent, we should find ways to help you convert it into a mortgage.” Asked if he was considering taking on extremely large loans, he replied: “Yes, for sure.” The idea of passing multi-decade mortgages between generations is not new and was pioneered in Japan, where 100-year family mortgages have been offered for some time. In the UK, relatively large mortgages are already the most common. According to the Building Societies Association, 37% of first-time buyers took out mortgages between the ages of 30 and 35, with only 10% opting for less than 20 years. The key challenge is the decades-long acceleration of housing prices beyond wage growth. In England, people in full-time work now have to spend an average of 9.1 times their annual earnings to buy a home. Longer-term mortgages would mean people could borrow larger amounts with the same monthly mortgage payment, potentially opening up many more homes to those who can’t buy right now, who may end up spending less money on repayments than what now for the rent. But what these mortgages wouldn’t do is solve the long-term building deficit. Graham Taylor, the chief executive of mortgage firm Hudson Rose, said the idea had complexities. “On the face of it, it seems like a great idea,” he said. “But the problem remains that the loan should be affordable for all the original applicants as well as the children who inherit it. Otherwise, children could risk inheriting a liability they can’t handle, which, when secured against your home, has devastating consequences.” Other potential complications include that when a property is passed on to children, it may be subject to inheritance tax and the prospect of individuals continuing their payments into retirement. Rob Gill, the chief executive of Altura Mortgage Finance, said that if the plan did open up the market to more first-time buyers, it would have the effect of keeping property prices artificially high. “It appears that governments around the world will go to great lengths to avoid the alternative of falling property prices,” he said.
