First-time buyers are being offered zero deposit mortgages as one of Britain's biggest lenders has launched a new "bank of mum and dad" deal for people with wealthy parents.
The new mortgages from Barclays have reduced the deposit home-buyers need from 5pc to 0pc of the purchase price, as long as their parents agree to save at least 10pc in a special savings account.
The cash is held in the parents' name and then returned to them after three years with 2pc annual interest added, provided that their child keeps up with the mortgage payments.
The average first-time buyer deposit has soared in recent years and now exceeds £28,000 according to Your Move data, creating a major barrier preventing millions of young people from getting on the property ladder.
Britain's housing crisis means around a third of all young buyers are now accepting financial help from family, Barclays said, prompting it to launch the deal.
Mortgage experts said many young buyers will be "jumping for joy" as the new, more generous criteria could significantly improve their chances of being able to buy their dream home.
But last night Conservative politicians condemned Barclays' move, claiming it flies in the face of the party's values as it penalizes young people who have managed to save a deposit without parental assistance.
Under the new deal individuals or couples with an income of £50,000 or higher can borrow a maximum of five and a half times their income, up from a maximum income multiple of around four and a half for other borrowers.
This means higher-earning buyers taking part in the deal could be offered the chance to buy a house which is at least £50,000 more expensive than other buyers with identical salaries and deposits.
David Willetts, former Conservative MP and a member of the House of Lords, said: “This is very striking evidence of how much people are now relying on their parents’ wealth to get on the housing ladder. To penalize young people who have built up the money for a house themselves goes against Conservative values and instead we should be spreading opportunity for everyone.”
Andrew Montlake of Coreco, a mortgage broker, said: “This is a big move that will leave a lot of first time buyers jumping for joy as they will now be able to get a foot on the property ladder without having to save anything for a deposit. This is also a great deal for parents who can keep their savings in their own name and even earn some interest while helping out their kids.”
Raheel Ahmed, head of Barclays Mortgages said: “Buying a first home is a hugely important step in everyone’s life and one that has unfortunately become tougher for many in recent years. We want to help both home buyers and the family who want to support their children, but can't give away large sums of money.”