- Readers Rating
- No Rating Yet!
- Your Rating
The latest 2019 research from Legal and General and Cebr has shown that the Bank of Mum and Dad is having to dig even deeper in order to help their offspring get on the property ladder.
Family and friends are spending an average £6,000 more than in 2018 to help loved ones onto the housing ladder.
The Bank of Mum and Dad will be more generous this year than ever before, as the average contribution increases to £24,100 – more than £6,000 more than the average contribution last year of £18,000. This rise is double the average UK house price increase of £3,000 in the year to March 2019.
However, in good news for buy to let property investors, the Bank of Mum and Dad will fund nearly 20 per cent fewer property purchases than in 2018, as youngsters rely the private rental sector.
The increase in Bank of Mum and Dad loan sizes has increased total lending for the Bank of Mum and Dad by 10 per cent this year – up to £6.3 billion from £5.7 billion in 2018. As a result, Bank of Mum and Dad is now the 11th largest mortgage lender in the UK.
This shift in loan size could be because Bank of Mum and Dad lenders are supporting family and friends to purchase larger properties. Three-bedroom houses or flats were the most commonly purchased properties in 2019 (44 per cent), and well over a third (38 per cent) have helped family or friends to buy a two-bedroom property. 15 per cent of lenders were even helping loved ones to purchase properties with four or more bedrooms.
It is not just youngsters being helped. More than a fifth (22 per cent) of people aged 45-54 have received financial assistance from Bank of Mum and Dad to purchase their latest property. Around 7 per cent of over-55s have also received help from family or friends to buy their most recent home. This support for older buyers is expected to double, with 14 per cent of Britain’s over-55s expecting similar assistance for a future house purchase.
Group Chief Executive at Legal & General, Nigel Wilson, said: ‘The Bank of Mum and Dad continues to be the ‘iceberg’ mortgage lender beneath the surface of our housing market – all but invisible yet exerting a massive influence, funding purchases across the country and helping people to defy the economics of affordability and realise their housing dreams. This year, parents or grandparents, family or friends are set to lend thousands more to fund nearly one in five house purchases.