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Sat, 15 August 2020

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Intergenerational mortgage lending can provide practical solutions for those most in need – Senior Treasury Minister

Intergenerational mortgage lending can provide practical solutions for those most in need – Senior Treasury Minister

Building Societies Association

4 min read Member content

Billions of pounds stored in savings, pensions, and housing equity potentially available for release could provide a range of options for all generations, says Economic Secretary to the Treasury, John Glen MP.

Welcoming a new independent report into intergenerational mortgage lending, the Economic Secretary to the Treasury, John Glen MP, said that “intergenerational mortgage lending is a market which will continue to go from strength to strength in years to come.”

Speaking at the launch event this week in the House of Lords, he said that he was hopeful that the Building Societies Association (BSA) report, titled Building on the Bank of Mum and Dad, and the work to follow, will “uncover practical solutions for those with means but also for those in most need of a helping hand”.

The minister said he was “grateful” to the BSA for its “proactive leadership” on this issue.

The Economic Secretary said that the Government was “steadfast” in supporting families as they strive to achieve the objective of home ownership and that “an invaluable component of this spirit of inclusiveness is affordable credit.”

The report’s co-author, Dick Jenkins, said the impact of schemes such as Help to Buy was “dwarfed” by the impact of the ‘Bank of Mum and Dad’.

BSA’s new report reveals that parents provide billions of pounds of help to younger homebuyers.

The report states that, with the right support, this role could grow without jeopardising the long-term financial wellbeing of older generations. 

The research recommends offering more flexible product features, looking again at high loan to value ratio mortgages, and using clearer communication about what products are available. This, the report demonstrates, would improve the opportunities for people who have access to the Bank of Mum and Dad, as well as those who don’t. 

According to the report, 70% of the public see home ownership as one of the biggest issues we face as a nation. 

Dick Jenkins said that the problem of concentrated housing wealth “was getting worse.”

Robin Fieth, Chief Executive of the BSA, said that the Bank of Mum and Dad “can’t solve everything” but empathised that making intergenerational mortgages work better “will be a benefit to many.”

In his support for the report, the Senior Treasury Minister spoke of his desire to continue to make the case for “responsible capitalism” and emphasised the significant role the mortgage market plays in achieving this “important objective.”

He said that with the billions of pounds stored in savings, pensions, and housing equity potentially available for release, this would help provide a range of options for all generations.

100% mortgages

In his wide-ranging speech, the author of the report made the case for reviewing lending up to 100% of loan to value.

He emphasised that this was not a call to revisit “the sins of the past” but said he believed that there were people out there who could sensibly manage these types of loans.

Mr. Jenkins stated that he was not suggesting the “wholesale movement of the risk curve”, but that “there has to be some circumstances where such lending makes sense.”

He also asserted that the level of the stress tests that people are required to undergo to demonstrate the affordability of their mortgages should be improved. He said that there was “a balance” between “financial responsibility and prudence, and denying young people mortgages into the property market.”


The Economic Secretary to the Treasury said that “the mutual sector is actually leading the way and they offer important diversity and competition in the financial services sector.”

He said the industry is “pushing the boundaries” of traditional models by “tactfully engaging” all parts of the UK financial service ecosystem as well as harnessing the benefits of fintech solutions.

The minister concluded saying the nature of building societies - acting in the interests of members, not shareholders - was “paramount” to the bespoke service that has “propelled the sector forward to the forefront of innovation in the mortgage market”.


A full copy of BSA’s new report, “Building on the Bank of Mum and Dad” is available here.


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