Bank of Mum and Dad now the ninth biggest Mortgage lender in the UK
Research by Legal & General and Cebr has found that family and friends now fund more than a quarter of all house purchases, as first-time buyers increasingly struggle to get on to the property ladder.
The Bank of Mum and Dad (BoMaD) has unofficially become the ninth-biggest mortgage lender in the UK with parents projected to provide funds towards over 298,000 mortgages, buying homes worth more than £75bn.
Parents are predicted to lend over £6.5bn to help their children get on, or move up the property ladder, representing an increase of 30% from last year’s figure of £5bn.
The average contribution is set to rise from £17,500 to £21,600, with Millennials estimated to be the biggest recipients of parental help, as 79% of funding goes to people under the age of 30.
The findings have put the Bank of Mum and Dad on a par with Yorkshire Building Society as the ninth largest mortgage lender in the UK.
Nigel Wilson, CEO of Legal & General, commented “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 creates 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’.
Wilson went on to say “The UK is experiencing a supply-side crisis in housing – we are simply not building enough houses. We need to build more homes for the young, old and families alike”
The report also revealed that nearly two in five Londoners receive help from the Bank of Mum and Dad, providing on average £29,400 of financial support per purchase.
Legal & General’s “Bank of Mum and Dad” research, May 2017