Intergenerational mortgages are now a thing. Two lenders, Nationwide and One Family , have plans to introduce new loans which would enable older people to borrow in order to help their children and grandchildren get on the property ladder.
Today’s property-owning grandparents and parents generally bought their homes in their twenties, back when housing was not beyond the reach of people on average salaries. While they’ve gone about their daily business and raised families in those homes they’ve watched them increase exponentially in value leaving them inadvertently sitting on a small fortune.
This, unfortunately, is the source of many an awkward conversation in many families. Especially in London and the South East where young people might find themselves living in rented box rooms in house shares into their 30s while their grandparents may remain in the family home, with empty rooms and a garden.
While an intergenerational mortgage could be an incredibly savvy solution it could also leave a somewhat bitter taste. We must not encourage middle class millennials who aspire to get on the property ladder and find themselves unable to do so, to see their ageing grandparents as cash cows.
I am now so deep in the housing crisis of affordability that some days I have to pinch myself as a reminder that I’m actually still alive and that even though I may not be climbing the greasy pole that is the property ladder everything’s actually alright. Your worth is measured by more than your housing status, or so I tell myself.
I went to university in 2006. It was the year before the Great Recession began. It was the year before the Wall Street collapse which began in the later part of 2007 because of subprime mortgages and sent invisible economic shockwaves all the way, across the Atlantic, to Europe. In 2006 I didn’t know what ‘sub-prime’ meant and I certainly didn’t know who the Lehman brothers were nor did I particularly care.
In 2010 when I graduated I was still blissfully and, to a degree, wilfully ignorant. Financial crash, whatever. Mortgages, boring. Housing crisis, not my problem. Now, I sit here writing this in 2016 as a self-taught mortgage expert. I read about them obsessively. I study them relentlessly. In fact, I’m pretty sure if I’m ever forced to change career path I could set up shop as a mortgage adviser and find you the best possible deal out there. The great irony of my newfound hobby as a mortgage watcher, a rates anorak, is that I don’t have a mortgage of my own. Nor am I particularly likely to have one any time soon.
Watching The Big Short in my overpriced rented flat on Saturday night it struck me that those who work in banks, housed by shiny glass and steel shells were crunching numbers and doing deals as the markets crashed around them. In the film Brad Pitt’s character, a retired banker who is now obsessed with organic seeds, stops two over eager college grad wannabe hedge fund managers from gloating about the deal they’ve just made to short mortgage bonds which, essentially, means that they will make money if people can’t afford to pay their mortgages. ‘If we're right, people lose homes. People lose jobs. People lose retirement savings, people lose pensions’, he says, ‘you know what I hate about f*cking banking? It reduces people to numbers.’
Before the Great Recession set in people were just numbers and statistics, as they always are in economics. Banking was reasonably faceless and people, broadly speaking, let bankers get on with doing whatever they wanted to behind closed doors. The human cost of their actions, however, was very real.
If intergenerational mortgages are one way forward, then they should come along with intergenerational conversations. We aren’t terribly good at dealing with ageing in this country which is a problem because our population is getting older. In mid-2014 the UK population was at its oldest ever. The number of people aged 65 and over has grown by 47% since 1974, making up nearly 18% of the total population, while the number of people aged 75 and over has increased by 89% over the same period, making up 8% of the population.
What this means is that, at the last count, 10 million people in the UK were over 65 years old. The latest projections are that there will be 5 ½ million more elderly people in 20 years’ time, with that number nearly doubling to around 19 million by 2050 when one in-four of the population will be aged 65 and over.
While our care systems struggle to cope with the number of older people in need of help, our youngest people can’t afford homes of their own because of a chronic shortfall in the number of available and affordable homes. Could the generations be doing more to help each other out, not just financially but in terms of care and support? The financial wealth might be held by older generations but younger people do have ways of paying it forward. We hear we are in the midst of a loneliness epidemic in older age. Could all those empty homes that grandparents have be filled with grandchildren who could do their shopping for them and keep them company? If our grandparents help us out by providing equity and guaranteeing our mortgages could we find ways of repaying the favour?
Obviously things, as they stand, aren’t great. It surprising that the so-called ‘housing crisis’ we face in this country hasn’t been upgraded to a ‘disaster’. And yet, if we were willing, perhaps there are some positives that we could take from the situation. A key one being that people are more than numbers, wealth is more than money and property is more than an asset. Rather than letting the housing crisis drive us further apart perhaps we should start seeing it as a way of bringing us back together. There’s more to life than getting a mortgage.
You might also be interested in:
We're Living In A New Class System And It's Depressing As Hell
Make Renting Fair: Why We're Calling For The End Of Letting Agent Fees
Follow Vicky on Twitter @Victoria_Spratt
This article originally appeared on The Debrief.