People are asked what they know about mortgages

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The longer loans would let people secure their dream home and pass on it – plus any outstanding debt – to their relatives. In the anticipated boost to home ownership, lenders would offer sums that buyers would not necessarily have to pay off during their lifetimes in order to let families buy bigger properties, with loved ones later inheriting them.

The Prime Minister has said that he is keen to “find all sorts of creative ways to help people into ownership”.

Government insiders said the current home loans system is skewed too much towards 25-year mortgage terms.

With younger potential buyers finding it almost impossible to get a foothold on the housing ladder due to soaring prices they believe that taking out a longer family mortgage will help.

Mr Johnson said: “I do think there’s a lot more scope to help people with 95 percent mortgages; there are quite a few products available now, which we’ve tried to encourage. But also, we want to find all sorts of creative ways to help people into ownership.”

The PM continued: “Last year, actually, 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.

“We need young people to have the confidence, to have the deposits, the mortgage packages to be able to get into ownership.”

Asked if he was considering cross-generation mortgages that could be passed down from parents to their children, he replied: “Yes, certainly.”

The Prime Minister is also considering freeing up more state-owned land so it can be used for housing.

Help for key workers is also being looked at, including building homes for teachers on school playing fields.

Industry experts say such the longer, hand-me-down mortgage change would require “political will” from the Government, regulatory changes from the Financial Conduct Authority – plus a desire from lenders to offer the loans product.

The maximum mortgage term currently available in Britain is 40 years but high housing costs mean that the average length of loan is already increasing from the traditional 25 years.

The Building Societies Association (BSA) said the most popular mortgage length among first-time buyers during the last 12 months was 30 to 35 years.

Some 37 percent took out loans lasting over that term in the year to March, BSA chiefs said. Mortgages lasting as long as a century were first offered in Japan in the 1990s to try to boost its property market.

Commentators here said if there was enough demand for something similar then lenders would consider it, but there would be many regulatory issues to resolve first.

Graham Taylor of mortgage broker Hudson Rose said: “On the face of it, this seems like a great idea, but the problem remains that the loan would need to be affordable for all the original applicants and also the children who inherit it.

“Otherwise, the children could risk inheriting a liability they are unable to manage which, when secured against your home, has catastrophic consequences.”

Jonathan Burridge, founding adviser at online broker We Are Money, said: “There would be a great many challenges in bringing such a product to the market in today’s regulatory framework.

“Although it could be argued that later-life lending proves that a unlimited term mortgage concept is fundable.

“There would be issues around affordability over the term (which would span several income generations), concerns that this is interest-only by another name and pricing to make the solution appealing.

“There would many other hurdles to overcome. I can see the regulators taking a pretty closed view on the idea at present.

“That said, where there is demand and pockets deep enough, and organisations patient enough, nothing is impossible. However, what does a 100-year mortgage solve? I believe the conclusion in Japan was that the product did nothing to dampen demand or value and it was seen as an inheritance planning tool for the wealthy.”

However Scott Taylor-Barr, financial adviser at Carl Summers Financial Services, warned: “I feel that Boris is coming at this from the wrong direction.”

He continued: “It is not the mortgage market that is preventing people from becoming homeowners; it is the cost of property in relation to people’s earnings.

“The issue isn’t to find ways to help people take on more debt. We need to find ways to build more houses, in the areas people want and need to live.”

While Jamie Lennox, a director and adviser at Dimora Mortgages in Blofield, Norfolk, said that “until more houses can be built quicker to curb the supply and demand issue we have, the percentage of young people getting on to the housing ladder will keep reducing.”

Mr Lennox continued: “The proposal of intergenerational mortgages is only going to benefit people with more affluent families that have high incomes or large assets in the first instance.

“They would likely end up helping their children get on to the housing ladder in other ways.

“Ultimately we don’t see this being the answer to change the reducing percentage of young people getting on to the property ladder.”

Sabrina Hall, mortgage adviser at Kind Financial Services of Lichfield, said: I feel that whilst I welcome any reform to the mortgage market that allows more people to buy their home I wonder if there is a way to support lenders to offer more of the options that we currently have.”

”Any scheme to help the kids out is going to be important to parents”

Father of three Joe Banfield says that a family mortgage would allow them to balance living in a big enough house and having money left over to enjoy themselves, writes Emily Braeger.

The 43-year-old from Milton Keynes, Bucks, told the Daily Express: “Taking out mortgages over a longer period of time would definitely assist us as a family.

“It would certainly help with cash flow as the monthly payment would be less so we could effectively borrow more money over a longer period and therefore afford a bigger house allowing us to have additional space for the children to live in.

“Having enough space is important with a larger family like ours and it would be vital if we ever have to look after the older generation at home.

“The only difficulty we might have is that we have three children so our next generation may not all want to live within the same house or take on the mortgage jointly!”

He joked: “I’m not sure how that bit would work… we may have to pick our favourite!”

Joe, a key worker, lives with his wife Mandy, 43, and their three children 10-year-old Amelie, seven-year-old Archie and five-year-old Ayla.

He added: “The bottom line is that any scheme that allows us to help the kids out is going to be important for us as parents.

“I bought my first flat for £64,000 in 2001 and it’s now worth three times as much.

“Wages have not inflated by the same amount, so I don’t know how any of our children are going to afford to buy anything on their own at any point in their life without us helping in some capacity.

“I would be very interested in being able to save money each month as we struggle balancing living in a big enough house and having money left over to enjoy ourselves.

“Travel has always been important to us as a family, so being able to lower monthly payments by borrowing over longer to allow us the cash flow to spend on holidays would be interesting to us.”

Facing a generation game plan

Multi-generational living is becoming more popular in the UK due to the “dreadful state of the UK’s property market”, says a housing expert, writes Emily Braeger.

Jonathan Rolande, from the National Association of Property Buyers, says sky-high buying costs, high rents, a shortage of new homes and rising interest rates are forcing families under one roof.

It’s not unusual for parents to have children cohabiting with them into their 20s or 30s thanks to high house prices.

And even before the pandemic, says insurance firm Aviva, this 2G-living was the pattern in 34 percent of the UK’s homes, accounting for nine million households.

Now, the phenomenon of three adult generations in one property has risen by about half in just five years according to Aviva figures from 2021. The NHBC, representing British housebuilders, has found multi-generational living is more established in other parts of the world, such as the US, Singapore and Japan, where builders design for the sector.

And Mr Rolande added the trend could bring families closer: “For once, the law of unintended consequences might just do some good.”

Emergency VAT cut on the table

An emergency cut in VAT has been considered by No.10 to help struggling families battle the cost of living crisis, writes Martyn Brown, Senior Political Correspondent.

Slashing the headline figure of 20 percent could reduce the tax bill for millions of people across the country and help ease the pressures faced by households as the cost of living crisis continues.

According to reports Steve Barclay, the Prime Minister’s chief of staff, suggested reducing the rate on a temporary basis.

But the Treasury has warned the move could end up fuelling inflation by overstimulating the economy.

Cutting VAT to 17.5 percent would also cost the government about £18 billion.

Inflation, which rocketed to 9.1 percent last month, is at its highest in four decades, contributing to strikes or threats of industrial action by workers across transport services, schools, postal services and hospitals.

John O’Connell, chief executive of the TaxPayers’ Alliance, said: “Brits will be delighted that ministers have finally woken up to their calls for tax cuts.

“Taxes are the single biggest bill families face and rising rates are compounding the cost of living crisis.

“Now is the time to help growth go gangbusters by giving taxpayers a respite from tax rises.”

But Paul Johnson, head of the Institute for Fiscal Studies, said cutting VAT would be “economically inappropriate”, adding: “It would reduce inflation in the short run because it would reduce prices relative to what they would have been. But it would increase inflation next year. It can’t help in the long run.

“And it could actually lead to higher inflation overall because you would be pumping extra money into an economy where demand is already outstripping supply. Stimulating demand at the moment would be economically inappropriate. On this one the Treasury is right.”

Alistair Darling, a former Labour chancellor, cut inflation from 17.5 percent to 15 percent immediately after the financial crisis in 2008. The approach was credited with helping the economic recovery.

However, Paul Johnson said: “A financial crisis was leading to an increase in unemployment and a fall in living standards. Inflation was not the issue. A VAT cut then was appropriate.

“At the moment ramping up demand when there are clearly supply-side constraints has the potential to make that more problematic.”

Both Chancellor Rishi Sunak and the PM are facing mounting pressure to set out a timetable for tax cuts

Boris Johnson has repeatedly promised to cut taxes, having told Tory MPs that they are the “biggest single household outgoing” and that the tax burden “must” and “will” come down.

However, his backbenchers are growing impatient and have called on him to give tax cuts priority over infrastructure spending.

It is understood that Mr Barclay raised the idea of cutting VAT during discussions with the Treasury over the past few weeks.

A source said: “Steve has reinforced to ministerial colleagues that decisions on tax need to be taken by the prime minister and chancellor and that in exploring options, colleagues need to follow up on the commitments the prime minister made in his letter to MPs at the time of the leadership vote.”

It comes after official figures showed the number of people expected to be subjected to the higher tax bracket will reach 6.1million this year.

When Boris Johnson won the 2019 general election, some 4.3million people were paying the higher rate.

Experts warned it could hit more than seven million by 2024 – meaning one in five taxpayers would be on higher rates, an increase of around 70 percent in this Parliament, according to the pension consultancy LCP.

Energy companies’ customer services hits record low

Customer service standards at energy companies have fallen to a record low as households are being hit by soaring bills, Citizens Advice has said, writes Emily Braeger.

New research from the charity has revealed customers have had to wait longer than usual for their calls to be answered and have regularly been unable to get hold of their supplier. Suppliers Utilita and Ovo Energy are among the worst offenders.

Standards have “plummeted” since June 2021 when several suppliers went bust due to high global gas prices, Citizens Advice said.

The average waiting time on the phone to speak to a firm is now about six and a half minutes, compared to just under four minutes the year before.

Companies are also getting slower at responding to emails, responding on average to 62 percent of emails within two working days, compared with 66 percent during the same period in 2021.

Citizens Advice is now calling for improvements before bills rise again in the autumn.

The annual energy price cap shot up by 54 percent to £1,971 in April and is expected to hit close to £3,000 in October.

It said its average rating had slipped from 3.2 stars out of five last summer to 2.8 in the first three months of 2022, the lowest on record.

The charity gave Utilita a 1.6 rating, with Ovo notching up to 2.1. Ecotricity and E.ON Energy were also among the worst performers.

EDF Energy was ranked the best performer, with a 3.6 rating, just beating Leicester-based Outfox the Market and Bulb Energy, which went bust last November and is now operating under a special administration status handled by the government.

Between January and March 2022, Citizens Advice said its consumer service helpline saw more than 70,000 cases related to energy issues – a 63 percent increase on the same period the previous year.

The charity said it was “particularly worried” about people on prepayment meters, who it said are at risk of having no gas or electricity if they can’t afford to top up.

It warned that “without swift action” to tackle poor customer service, standards “will only worsen when bills are expected to hike again this winter”.

Energy suppliers are obliged to help people who cannot afford their bills.

Citizens Advice chief executive Clare Moriarty said: “At a time when customers need all the support they can get, it’s worrying to see service performance is the worst on record. This leaves people frustrated and in the dark at the end of the phone.

“For many families on low incomes, life will get even harder when the price cap goes up again in October, despite government support.

“We recognise call centre staff are working incredibly hard to answer as many calls as possible, but energy companies must do better. This should include improving support services for people struggling the most. Ofgem should make sure suppliers are following the rules, and take action where needed.”

Ofgem said it was working with suppliers to improve service, adding that “now is the time for them to up their game”.

A spokesman for the energy watchdog said: “Our top priority is to protect consumers, and as these stats from Citizens Advice show, there are areas where customers are simply not getting the service they desperately need and rightly expect in these very difficult times.”

He added: “We are clear with suppliers – they must not use the current gas crisis as an excuse for poor performance or sharp practices; now is the time for them to up their game on how they support customers.”

A spokesperson for Utilita said: “Yet again, the Citizens Advice Star Rating fails to reflect neither the unique nature of our business nor the service our customers receive.

“We also have issues with their approach to recording complaints which classes “contacts” made to them by our customers as “complaints”, regardless of whether we are at fault.

“If we then seek to follow up, Citizens Advice refuses to adjust the reporting to reflect the update because “priority” customers cannot be disputed according to their methodology – even where the supplier has done nothing wrong, and we have had no contact with the customer. This further misrepresents our actual performance.

“We acknowledge that we can do better, but we strongly believe Citizens Advice employs a methodology that is unfairly weighted against us as a smart prepay specialist. It doesn’t take into account key services such as Live Chat, Financial Assistance and Energy Efficiency advice, all of which we excel at.

“As always, we’re happy to work with Citizens Advice – who we recognise is committed to supporting its vulnerable clients – and look forward to a more representative picture of our performance in its next ranking.”

An E.ON spokesperson said: “We saw an unprecedented spike in contact from our customers during this period ahead of the April price change and apologise to any customer who feels our service fell short around this time.

“We strive to provide great service to every one of our customers, as proven by our ‘excellent’ rating on Trustpilot, based on feedback from over 30,000 customers.”

An EDF Energy spokesperson said: “We are pleased to see our customer service has achieved the top spot in Citizens Advice’s latest table during a time of extreme upheaval in the industry after global energy prices spiked and 30 suppliers collapsed.

“This is testament to the hard work of all our customer service advisors who are doing their very best to help and the investments we are making in our workforce, increasing it by 500 since October last year and creating a new customer support framework.”

A Bulb Energy spokesperson said: “We’ve always tried to look after our customers and make things easier for them, especially now, when we know this is a difficult time for many people.”

Income alarm as fixed-rate deals finish

Homeowners coming off fixed-rate mortgages on to a new deal this year can typically expect their disposable income to shrink by 7 percent, reveals a report by UK Finance, writes Vicky Shaw.

The trade association said 1.3 million customers are set to reach the end of their fixed-rate mortgage deals this year. It added: “On average, we estimate the combined impact of cost-of-living and re-mortgage onto a new deal would result in around a 7 percent decrease in free disposable income.”

Five-year and two-year deals account for two-thirds of fixed rates maturing this year.

However, UK Finance said: “Although re-mortgaging options on the open market may be more limited, the widespread availability of internal product transfer deals mean almost all will be able to access a new deal at competitive rates.”

This week, the Office for National Statistics said real household disposable income dropped 0.2 percent between January and March. Income growth of 1.5 percent was outstripped by household inflation of 1.7 percent.

The UK Finance document also highlighted wage growth, saying while it is “certainly more robust than recent years”, it is not expected to keep up with price growth the way it did in previous periods of high inflation.

The Government has previously announced a package of cost-of-living support measures. 

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