The Bank of Mum and Dad apparently is now Britain’s ninth biggest “mortgage lender” putting it on a par with the Yorkshire Building Society. Parents are predicted to lend more than £6.5bn this year to help their children get on the property ladder. This is a 30% increase on the £5bn loaned in 2016 according to recent research from Legal & General and economics consultancy Cebr. This means that parents will be involved in more than 25% of UK property transactions as first time buyers continue to struggle to afford homes.
According to the report, the so called Bank of Mum and Dad will help fund property purchases worth about £75bn in 2017 including deposits for more than 298,000 mortgages. Parental assistance is expected to have risen from an average of £17,000 in 2016 to £21,600 this year. For those under the age of 35 the proportion seeking help from parents, friends and family for property purchases stands at 62%.
Nigel Wilson, the chief executive of L & G said “This is the second year of our bank of mum and dad research programme and the statistics show the problem is getting worse, not better.”
“The intergenerational inequality that creates the demand for (parental) funding continues to widen- younger children today don’t have the same opportunities that the baby boomers had, including affordable housing, defined benefit pensions and free university education.”
“Parents want to see their kids get on in life and the bank of mum and dad is a testament to their generosity, but it is also a symptom of our broken housing market.”
The surge in parental lending comes in spite of record low rates on mortgages, fuelled by intense competition between lenders for new business. But while mortgage repayments have never been more affordable, high prices in parts of the country mean first time buyers need large deposits to qualify for loans.
