As the UK’s housing crisis continues the Bank of Mum and Dad is ever more in demand, becoming the equivalent of the ninth-biggest mortgage lender in the UK, moving up from 10th place last year.
This makes the Bank of Mum and Dad bigger than Clydesdale Bank in mortgage market terms and only a fraction smaller than Yorkshire Building Society.
New research by Legal & General and the Centre for Economics and Business Research consultancy has estimated that The Bank of Mum and Dad will lend over £6.5bn this year, up from £5bn last year. Yorkshire Building Society lent £6.6bn.
The lack of affordable housing is making it increasingly difficult for young people and first-time buyers to get a foot on the housing ladder. Fledgling buyers are consequently looking to their parents to help fill the financial gap, with the Bank of Mum and Dad helping to provide deposits for more than 298,000 mortgages last year, equating to 26% of transactions.
Of the money lent, 70% of it was used by young people under the age of thirty, although the average age of a first-time buyer has now risen to 30, and has reached 34 in London.
Nigel Wilson, chief executive of Legal & General, said: “The Bank of Mum and Dad continues to grow in importance in helping young people take their early steps onto the housing ladder.
"The intergenerational inequality that create the demand for BoMaD funding continues to widen – younger people 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 help 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."
Over-55s are sitting on £1.5 trillion worth of property equity, a proportion of which is being used to fund the younger generation’s house purchases: the number of house hunters who benefitted from the help of family and friends rose from one third in 2016 to 42% this year.
The amount of money that the Bank of Mum and Dad is prepared to hand over has also risen by a striking 23% over the past year, to £21,600 in 2017.
Mr Wilson highlighted the fact that the UK is experiencing a ‘supply-side crisis in housing’ and that there was an urgent need to ‘build more homes for the young, old and families alike’.
It is expected that while the amount lent by the Bank of Mum and Dad continues to rise, the total number of properties being bought will start to fall as a slowing market results in fewer transactions.
ANY PROPERTY USED AS SECURITY, WHICH MAY INCLUDE YOUR HOME, MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
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