Cool response to mates mortgages from lenders
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Lenders are unlikely to respond to housing minister Grant Shapps’ call to offer ’mates mortgages’ due to a lack of demand for the products, say industry commentators.
Shapps’ claim that lenders offering mortgages for groups of friends would help solve the first-time buyer crisis at his second first-time buyer summit last week has been met with a muted response.
Melanie Bien, a director at Private Finance, says these types of mortgages have been available for many years but have never taken off because of a lack of demand.
She says: “There are so many potential pitfalls, such as people falling out or someone wanting to go off and get married, so I am not convinced that this is the answer to the first-time buyer problem. Mortgages should be taken with a long term view.”
Shapps says he would like to see more lenders offering mortgage products targeted at groups of friends such as Britannia’s Share to Buy deal.
He says: “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 on to the housing ladder together.”
But Paul Broadhead, head of mortgage policy at the Building Societies Association, says: “People’s circumstances change very quickly and it can be difficult enough to rent with a group of friends, let alone to buy with them.
“For first-time buyers, we should be focussing on the solutions that benefit the majority rather than the few.”
Britannia’s Share to Buy deal is so far the only mortgage product marketed specifically to groups of friends or family, but a number of other lenders will accept up to four multiple applicants on a mortgage.
NatWest Intermediary Solutions says that it has accepted mortgage applications from up to four applicants for many years and this is not a new phenomenon.
Graham Felstead, head of intermediary channel at NatWest Intermediary Solutions, adds: “While it is good that this issue has been highlighted, this is not an unusual scenario and judging from our experience I would imagine most mortgage intermediaries are fully aware of it.”
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