Quarter of all purchases supported by ‘Bank of Mum and Dad’
‘The Bank of Mum and Dad’ will be involved in 25% of all UK property purchases in 2016 to the tune of £5bn, according to research by Legal and General.
The financial giant has published a report in conjunction with consultancy Cebr, into the role the Bank of Mum and Dad plays in helping their children get on, or move up the property ladder.
It shows they will provide deposits for over 300,000 mortgages this year, purchasing homes worth £77bn. This makes the Bank of Mum and Dad the equivalent of a top 10 mortgage lender in the UK which will be involved in a quarter of all property transactions in the UK market this year.
Nigel Wilson, CEO of Legal and General, said: “The Bank of Mum and Dad plays an increasingly vital role in helping young people take their early steps on the housing ladder.
“But the generosity being displayed by UK families doesn’t make up for intergenerational unfairness – younger people today don’t have the advantages the baby-boomers had, including cheap housing that delivered windfall gains.
“Relying so heavily on the Bank of Mum and Dad however risks increasing inequality as many young people today are not lucky enough to be able to access parental support when buying a home, or can’t afford to buy even with parental help.”
The research also revealed that the average financial contribution from the Bank of Mum and Dad is £17,500, or 7% of the average purchase price. Over three-quarters of purchases will be assisted by the buyer’s parents – with the rest supported by grandparents, other family members or friends.