Bank of Mum and Dad continues to play key part in housing market
New research suggests that ‘The Bank of Mum and Dad’ continues to play a key role in access to the 2018 housing market.
According to research and forecasts from Legal & General and Cebr, parents will represent the equivalent of a £5.7 billion mortgage lender this year, with 316,600 anticipated to receive financial help from parents, up from 298,000 since last year.
Over the last two years, the value of property purchases helped by parents has grown by 5% to £81.7 billion; in monetary terms, this is equivalent to a growth of £4.2 billion.
It is worth noting that whilst the role of parents is helping access the ladder is not diminishing generally, the amount that they contribute is. On average, the parental contribution provided is expected to fall to £18,000 this year, down from £21,600 last year. This is reflected in the drop in total lending, having fallen from its £6.5 billion peak last year to £5.7 billion in 2018.
Commenting on the figures was Group Chief Executive at Legal & General, Nigel Wilson.
He stated: “The volume of transactions depending on Bank of Mum and Dad funding keeps on growing, even as parents find it harder to provide as much money for the deposit. BoMaD funding is a vital plank in the housing market, but this year the supply of funds is being squeezed. This is not a positive trend – nor is it sustainable or fair for our parents (the lenders) and young people (the borrowers) to remain so co-dependent when it comes to housing purchases.
“We need to take action to fix the housing market and open up affordability for all. Institutions like Legal & General are making a positive difference in the supply of affordable residential housing as well as the towns and cities in which the homes are built. Jobs, infrastructure and economic growth are needed to create thriving communities where people can afford to buy.”