House price rises of between 14 per cent and 17 per cent are creating affluent home owners in middle age, especially those who have paid off their mortgages.

According to The Centre For Economics And Business Research, UK home owners occupy property worth a total of more than £2,100 billion.

Another ten per cent price rise, likely to take about nine months at the present rate, will hand another £210 billion to lucky home owners.

Total mortgage debt is only £606 billion and falling fast for older home owners who are collecting endowments to pay off their loan.

In total, mortgages account for only 28.7 per cent of the value of the properties against which they are secured.

While mum and dad are sitting pretty, their children, often weighed down by student debt, face an awesome task in getting on to the property bandwagon. Many have little hope in the present free-for-

all unless parents find a way of transferring property profits to the next generation.

This is the why the guarantor mortgage, fine-tuned by the Newcastle Building Society a few months ago, is taking off so quickly. Eleven major lenders are already in the sector and brokers expect rising demand with no end to the property boom yet in sight.

David Bitner, technical director at The MarketPlace at Bradford and Bingley, said:

"Because prices have steamed ahead, first and even secondtime buyers find it difficult to get the right property, even with low interest rates.

"We need new flexible ways of funding to get around the problems which high prices cause."

Two types of guarantor mortgage are up and running.

One helps students to buy a property in their university town and earn income to cover repayments by letting out spare rooms to fellow students.

Royal Bank of Scotland will advance loans up to 100 per cent of the value of the property, providing the total loan held by the parents on their main home and the second property is no more than four times their total income.

Parents with a £100,000 loan on the £200,000 family home and a joint income of £50,000 could therefore borrow another £100,000 to buy the second property.

The Mark Two guarantor mortgage is for children unable to afford the home they want on the standard multiplier of three-to-four times income.

The Newcastle has untangled this problem with a loan which enables parents to stand as guarantors for their children.

Suppose a couple with a mortgage limit of £52,000 actually need £72,000. The parents must guarantee the £20,000 gap and be prepared to lose some of that money if the market turns sour and the property is sold at a loss.

Newcastle Building Society presented this package with a five-year, fixed-rate loan.

Buyers were wary of the fixed rate and that enabled rival lenders to squeeze into the market with cheaper money.

Others in the field include Abbey National, Bank of Scotland, Bristol and West, Cheltenham and Gloucester, Halifax, Nationwide, Northern Rock, Royal Bank of Scotland, Skipton and Yorkshire.

Most offer the guarantor mortgage on their standard range of loans, either at a fixed or variable rate.

The MarketPlace is doing its bit for innovative mortgage lending by extending the Rent-

A-Room mortgage which enables homebuyers to let a room in their home for up to £4,250 a year and add £13,000 to their borrowing capacity.

The £4,250 limit was chosen because that is the figure which the Government allows as non-taxable income for home owners who take in tenants. But many home buyers believe they could earn more from this source, particularly in London and the major provincial cities.

Mr Bitner said: "We have buyers who claim they could earn £1,000 a month from renting out rooms. We are looking for ways to increase the loan if the surveyor is confident their figures are realistic."

These new-style mortgages, of course, are by-products of a booming housing market.

Buyers should only get involved if they are confident they can handle both a tougher market and rising interest rates.