Bank of Mum and Dad Becomes 11th Largest Mortgage Lender
The so-called Bank of Mum and Dad has now become the eleventh-biggest mortgage lender in Britain, according to research. It is said that this means parents provided over £6 billion in funds to help children take steps on the property ladder during 2019.
The Bank of Mum and Dad (BoMaD) report from Legal & General reveals that almost two-thirds, a total of 62 per cent, of property buyers below 35 years have received help from their parents totalling an average of £24,100. This has gone up by over £6,000 compared to 2018.
This means that although there have been fewer transactions in the UK housing market, the BoMaD is likely to lend a massive £6.3 billion this year. This is an increase of over ten per cent, going up from £5.7 billion in 2018.
The generosity of family members extends further than just young buyers too. Over a third (36 per cent) of those aged between 35 and 44 and 22 per cent of those in the 45- to 54-year-old bracket admitted to having support during a recent home purchase, paying for everything from deposits to conveyancing fees.
The figure means that BoMaD is effectively the UK’s eleventh-biggest mortgage lender, funding a range of property purchase costs, including solicitors and conveyancing fees. Read more about the costs involved in buying a home at https://www.gov.uk/government/publications/how-to-buy-a-home/how-to-buy.
UK Finance say that Britain’s biggest lender was Lloyds in 2018, lending around £42.5 billion. Nationwide came next, handing out £35.7 billion, followed by the Royal Bank of Scotland with £30.5 billion.
The amount being lent by the BoMaD dwarves payouts from government housing affordability schemes, including Help to Buy schemes. In fact, figures show that the equity loan which comes under the Help to Buy initiative has supported fewer home purchases in total compared to what the BoMaD has paid out in just one year.
The good news for some first-time buyers, however, is that Britain’s property price growth slowed down to 3.3 per cent during 2018. This is under half of the growth experienced in 2016.
The report did still show, however, that the average property price was around £150,000 a decade ago, and this figure is likely to double before 2023. The average price in London is £463,000.