The British government is looking at whether it might be possible to have mortgages with 50-year terms, that could be passed between families.
It’s not a new idea, with 100-year family mortgages having been offered in Japan for some time. The longest term available in the UK now is 40 years, while in New Zealand the longest term offered is 30 years.
UK Prime Minister Boris Johnson has now confirmed the 50-year mortgage is on the cards.
“Last year we had 400,000 first-time buyers. That’s a great number, we’re starting to turn the tide, but it is crucial for this government and for our overall economic story if those numbers continue to be strong,” The Guardian reported Johnson saying.
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Houses in Bristol, England. The UK government is looking into the idea of 50-year mortgages.
“We need young people to have the confidence, to have the deposits, the mortgage packages to be able to get into ownership. If you’re good enough to pay a lot in rent, we should find ways to help you to convert that into a mortgage.”
Asked if he was considering ultra-long mortgages, he replied: “Yes, certainly.”
Ministers believed the plan would give people the chance of moving into their dream home as they would be able to take out larger loans.
Other housing ideas being considered included freeing up government-owned land for rapid homebuilding, and allowing institutions, such as schools, to build homes for key workers priced out of local areas.
Jon Super/AP
Britain’s Prime Minister Boris Johnson said it was crucial the number of first-time home buyers continued to be strong.
Under the 50-year mortgage proposal, people would also not be expected to finish paying off their mortgages during their lifetimes. Instead, they would be able to hand over their properties, and its outstanding debt, to their children, the Daily Mail reported.
Last month, Johnson vowed to turn “Generation Rent” into “Generation Buy”, He launched a review of Britain’s mortgage market with the aim of increasing the availability of 95% loans.
The Express quoted Jonathan Burridge, founding adviser at online broker We Are Money, saying that among the issues with a 50-year mortgage was that it could an interest-only loan by another name.
He questioned what was achieved by the 100-year terms in Japan, saying he believed it had been found the product did nothing to dampen demand or value, and that it was seen as an inheritance planning tool for the wealthy.
