It’s been another gloomy week for the housing market. On Monday, property website Rightmove reported that asking prices for homes fell for the third month in a row in September, shedding 1.1%. They have now lost half of the gains made in the first six months of the year, with the annual rate of growth falling to 2.6%. Meanwhile, figures from the Council of Mortgage Lenders showed that gross mortgage lending fell to around £11.4bn in August, down 6% year-on-year. It was the worst August total seen in ten years.
But not every homeowner will be upset. According to a survey by the National Housing Federation, which represents housing associations, a third of parents on middle incomes are hoping for a fall in house prices.
Why? So that their children can buy their first home. Already, nearly 60% of such parents feel they have to help their adult children out with raising a deposit, says Thisismoney.co.uk.
If you’re in this situation, you may be interested in a new mortgage out from National Counties. It lets first-time buyers borrow up to 95% of the value of a property. The rate is fixed at 4.99% for three years and the fee is £495. The catch is that a parent must act as guarantor (ie, if their child defaults, they become responsible for the mortgage) and they must also take a charge on their own home if the loan is for more than 75% loan-to-value.
Given the uncertain economic climate, we’d suggest parents tell their offspring to wait and keep saving rather than put the entire family’s necks on the line. But maybe that’s just us.
• Minutes from August’s Bank of England interest-rate setting meeting showed that members of the Monetary Policy Committee (MPC) voted eight to one to keep the bank rate at 0.5%. With Consumer Price Index inflation at 3.1%, the MPC isn’t making life easier for savers. But one instant-access tax-free individual savings account (Isa) beats inflation (just). If you have a current account with Santander/Alliance & Leicester, the bank offers a flexible cash ISA that pays 3.2% and is guaranteed to be 2.7% above bank rate for the first year. But you have to apply in a branch.