Over a quarter of properties are bought with the help of the “bank of mum and dad”, according to a recent study.
The research, conducted by Legal & General and consultants at the Centre for Economics & Business Research (CEBR), indicates that younger buyers are becoming more reliant on parents when they buy a home. The figures revealed that friends and family are relied on to lend over £6.5bn this year, in comparison to £5bn in 2016.
Data shows that parents have some involvement in 26% of house purchases, helping to fund deposits for over 298,000 mortgages, buying homes worth around £75bn. The report shows that these figures put the “bank of mum and dad” at the same level as the ninth largest mortgage lender in the UK, the Yorkshire Building Society.
Nigel Wilson, the chief executive of Legal & General, stated that these figures were an indication of a “broken housing market”, with insufficient housing. Wilson referred to free university places, defined benefit pension schemes and affordable housing, and how they helped the older generation to get onto the property ladder.
The recent data shows that friends and family helped a third of buyers in 2016, while the figure for 2017 is set to rise to 42%. The report outlined that people under 30 are most likely to require assistance with funding, with the average amount given being £21,600, which has risen from £17,500.
Although it is difficult for first time buyers, mortgage advisers have CeMAP training to help find a suitable mortgage product which is affordable.
