The financial world of 2030 as seen in the Consumers in 2030 report we produced with Which? magazine is radically different from that of today with the emphasis on shared endeavour and a disintermediation of large financial institutions. The Crowd House Mortgage idea couldn’t be more removed from the model of today. The capital lent is sourced from people who know the borrowers – possibly only in a virtual sense – and the lending decision is taken not by computer but by those lenders. “Computer can’t say no, co-worker can say yes.”
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Could it happen? Quite possibly. The economic environment may not get better and banks may continue to be unpopular. That’s the “production” side of the current version under pressure. The demand side may be more subtle, coming down to what young people prefer out of the options outlined in the report: multi-generational living, expensive renting or buying with peers in a rolling re-run of student days. Put like that, seeing appreciable demand for co-own mortgages isn’t impossible is it?
The research makes it clear new ideas are needed and not just in housing. One we are looking at is an alternative pension, the sustainable lifetime pension. The idea is simple: instead of investing in financial assets located quite possibly thousands of miles from your home, you invest locally in things that will secure a better quality of retirement:
- How can you help make old people feel more secure? Invest local pension contributions into the local economy so that people are employed closer to home and can feel more protective of the area where they work.
- How can you protect the elderly from rising energy prices? Allow them to direct pension savings into local renewable energy schemes whilst they are working in return for capped energy fees in retirement.
You can see the idea: local money into local assets with a return which isn’t entirely financial. That idea and the crowd source mortgage are some way away now. But both are valid ideas for focusing thinking debate as we look at an unclear future.