Quick pub-quiz question: in what year was the last building society launched?
Give up?
1981 – and it was Ecology Building Society.
Well, that answer could now be contested if you said 2014 because the Family Building Society just joined the market.
The most interesting thing about tthem is their product called the “family mortgage.” It’s aimed at first-time buyers, and would let their family provide security for the mortgage by pooling their money. Their own blurb sums it up:
“The principle behind the Family Mortgage is simple. Most young adults don’t have a lot of money. That means they will only have a small deposit to put down on a property and they miss out on most of the better mortgage rates. At the same time, families may have savings and property that could be used as security for a buyer. The Family Mortgage brings these wider family assets into the mortgage calculation, helping to reduce the cost for the buyer but not asking family members to hand it over as a gift.”
The Mortgage Broker article points out that the family mortgage is not unique; the Woolwich offers the similar “Family Springboard” mortgage. But it is certainly their focus, and it will do interesting things to the market by giving other lenders pause for thought.
Here at Limetree, we love competition. It increases choice, and keeps lenders working hard to win business. We will keep tracking the family mortgages, and watching the Family Building Society as it gets up and running.
