Sam Dunn: Bubble, bubble keeps housing out of trouble

Take one overpriced housing market. Add an army of first-timers saddled with debt but desperate to buy in order to stop wasting money on rent. Spice it up with a sprinkling of creative mortgage deals and business ideas. Then turn up the heat with historically low interest rates.

The resulting broth might not be to everybody's taste but it doesn't lack flavour.

All sorts of unusual ingredients are being tossed into the mix to help first-time buyers get on the ladder and keep the UK residential property market simmering. First, there's a dash of romance with a new speed-dating service for would-be homeowners prepared to buy with a virtual stranger. Housedates.com, the business behind the idea, says you will get four minutes with a prospective partner before moving on to the next.

At the end of the evening, those who find they get on will have a starting point for a commercial relationship in which they split the cost of buying to make it more affordable.

Then there's an element of mortality, with the announcement of a "deathbed" mortgage from Kent Reliance building society (see pages 22 and 23). This enables loans to pass to the children when parents die.

Mum and Dad feature again in the mix with "guarantor" mortgages. These make parents liable for repayments if their child - who benefits from being able to take out a bigger loan - runs into serious difficulty.

And let's not forget special deals for graduates - 100 per cent loans for those starting off in promising careers - or those precipitous 125 per cent mortgages that give you extra cash to spend on furnishing the home.

The Government is also stirring the pot. It has introduced cheaper "key worker" loans for teachers, nurses and other public servants who need to live close to their work, and in October it launches "shared equity" schemes for all first-timers.

For those without a deposit, shared equity lets borrowers take out a mortgage for 75 per cent of a home's value, with the other 25 per cent funded by the Government and the same lender.

All this innovation keeps the market bubbling, yet concerns are creeping in.

Some are political - that the Government is using taxpayers' money to subsidise home ownership - and others debt-related.

Over-indebtedness hangs over much of Britain - with record personal insolvency figures - and many lenders and brokers are worried that a series of interest rate rises, or a downturn in the housing market, could lead to tens of thousands of first-timers defaulting on their repayments.

They're right to express concern but caution is a better response.

As long as borrowers do their research, take the advice of brokers and weigh the financial consequences of a particular home loan, then the more diversity on offer the better.

Choice leads to stronger competition and better deals for all - whether the market falls, rises or carries on chugging along.