Lloyds’ new 100 per cent ‘Lend a Hand’ mortgage lends a hand to those who least need it

The Bank of Mum and Dad is being rebranded as the Bank of Mum, Dad and Lloyds.

If you’ve got pots of cash and are willing to park it with the aforementioned for at least three years your kids will be able to get a 100 per cent mortgage.

Scraping together the money for a deposit is one of the biggest blocks on millennials entering the housing market, unless, that is, they have parents willing to put their hands in their pockets.

Lloyds’ new mortgage makes life even easier for those in that fortunate position.

It works like this: parents, or grandparents (because they can join in the fun) agree to put an amount equivalent to a 10 per cent deposit with the bank for three years in return for a fixed 2.5 per cent rate of interest.

That’s not market leading, but it is competitive when compared to other lock-in products with fixed rates that are available right now.

In return their offspring will be able to buy a home deposit-free at 2.99 per cent, which is also fixed for three years. The rate isn’t great when compared to the market leading 95 per cent mortgages. But it’s right up there when you set it against the handful of 100 per cent products that are available.

After the financial crisis banks decided conservatism was the order of the day when it came to mortgages. They took such fright at Northern Rock, which had been offering a 125 per cent product before it went pop, that even 95 per cent loans became hard to come by, at least until the government stepped in with its Help to Buy scheme. That was a controversial measure by itself for reasons I’ve previously discussed in this column.

Even with it, the housing market has been in a state of profound torpor of late, in part thanks to Brexit, in part thanks to prices that make it very hard for first-time buyers. So lenders seem minded to try and experiment again to give their mortgage businesses a shot in the arm. It should be noted that Barclays offers a comparable product.

You can poke holes in the design, but perhaps the biggest problem with the the “Lend a Hand” mortgage is that it lends a hand to people who least need one and thus helps to entrench the social division that plagues this country.

It’s the “I’m alright Jack” loan for people who are already alright.

While their debt-ridden peers are struggling with sky-high rents, driven by a profound housing shortage, and short-term tenancies that favour the landlord in nearly every respect, they’ll be sitting pretty courtesy of a mortgage that is only available to them.

So come and have a ride on the black horse. You can wave regally at the serfs blow while you’re trotting along.