Just as we thought that there was no money left for the housing market along comes another prop.
The Telegraph reports that Hitachi Capital will be offering mums and dads of would be first time buyers a whopping £50,000 loan (minimum £15,000) to act as a deposit for their offspring's new purchase.
The Helping Hand loan from ARTAB Capital (www.artabcapital.com) will be tied to the purchase of a brand new Barratt (including the David Wilson and Ward brands) home and be offered to parents who own their own homes and have a good credit history.
There is a fund of Â£1 billion to be tapped and the lending will come in the form of a 12 year unsecured loan for their children needing up to 20% for a deposit, with the first 5% to be found by the purchaser. The rate is 5.4% fixed with no early repayment charges and unlimited overpayments allowed. Then all that needs finding is the 80% mortgage. Conveyancing though has to be done through one of their panel of solicitors.
The housing market does not need new innovative ways of sucking more of peoples' money into it. It needs affordability so that the people who want to buy can do so with their own money. Using the bank of mum and dad in this way will pump another billion into housing so artificially keeping the prices up that bit longer.
I'm all for people owning their own little place, but not at absolutely any cost.
Also, if prices continue to slide over the next few years then its not only the children that will be affected by the negative equity trap, the parents will also be effectively paying interest on an asset falling in value.
This will though help those who want to shift houses, mortgages, insurance and legal services today.
OK, the interest rate is good and equates with some fixed rate mortgages available. So I'm left wondering how the lender's interest, although not protected by securing the loan on any property, is protected? After all that's a huge amount.
Also bear in mind that, at the end of the day, the forced sale of a home (or charging order) can be engineered through the courts for the repayment of any loan. And that would be the parents' home, not the one purchased by their child.