June 26th, 2019

Parents set to lend children £6.3bn in 2019

Parents set to lend children £6.3bn in 2019

In a bid to help their children get on the property ladder, parents are predicted to hand out £6.3bn worth of loans during 2019 according to recent research.

A survey conducted by Legal & General and the Centre for Economics and Business Research (Cebr) found that parents are expected to be involved in more than a quarter of a million property purchases this year making the ‘Bank of Mum and Dad’ (BoMaD) the 11th largest lender in the UK.

The study also found that parents are now gifting an average of £31,000 for their Child’s deposit, depending on the region. For many people, the only way to buy their own home is by receiving financial help from their parents and it seems that this scenario is becoming a much more common occurrence with 35 per cent of prospective buyers expecting to receive financial support from family members.

Nigel Wilson, Legal & General’s group chief executive, stated “The Bank of Mum and Dad continues to be the ‘iceberg’ mortgage lender beneath the surface of our housing market – all but invisible yet exerting a massive influence.”

“This year, parents or grandparents, family or friends are set to lend thousands more to fund nearly one in five house purchases. The Bank of Mum and Dad is a symptom of Britain’s broken housing market and it goes far beyond millennials relying on their parents as more older borrowers look to family and friends for financial support.”

“Our reliance on ‘BoMaD’ funding is an increasingly skewed facet of the UK housing market. It’s dependency, not generosity. It is socially divisive and it’s creating a ‘locked out’ generation of first-time buyers who aren’t lucky enough to benefit from this kind help.”

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Written by Kay Crooke – Associate Practice Director at Prosser Knowles Associates Limited.

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