How are first-time buyers affording houses? Why, Mum and Dad, of course!
More than a quarter of house purchases are now funded by a buyers' parents, as young people and first-time buyers struggle to get on the housing ladder.
The trend, termed ‘The Bank of Mum and Dad’, will lend more than £6.5bn this year, putting it ahead of many big banks and building societies, research by the Legal & General and the Centre for Economics and Business Research consultancy found.
The research reveals:
• The Bank of Mum and Dad is equivalent to the ninth biggest mortgage lender in the UK, putting it ahead of the likes of Clydesdale Bank in the mortgage market, and just behind the Yorkshire Building Society
• It helped provide deposits for more than 298,000 mortgages last year
• Almost 30% of property transactions involved mum & dad so far in 2017
• Most buyers benefiting are aged under 30 (the average age of a first-time buyer is 30 – or 34 in London)
• The average transaction involves a contribution of £17,500, with three quarters of BOMAD purchases being funded by parents
• Over-55s are sitting on £1.5?trillion worth of property equity
Emma Coffey, property expert at Goldsmith Williams Solicitors, comments:
“Having help from mum and dad is no doubt a great advantage to fortunate first-time buyers. It’s also a great boost for the market because, as we know, it is becoming increasingly difficult to hop onto the housing ladder.
“However, these research findings do concern me, as it proves just that. Housing shortages and increasingly unobtainable pricings are creating an unsustainable model for the UK’s market. Will these same young buyers be able to fund their own children’s property purchases in 20 years’ time? I am doubtful.
“More steps need to be taken by the Government to ensure housing is affordable to all and that the currently supply crisis is addressed.”
Content correct at time of publication