The Bank of Mum and Dad (BoMaD) is officially the 11th largest mortgage lender in the UK, according to research by Legal and General.
The latest BoMaD report from the financial services company shows that parents have provided more than £6bn to help their children buy a property so far this year. In fact, 62% of home buyers under the age of 35 have received an average amount of £24,100, an increase of more than £6,000 on the average financial sum provided by parents in 2018.
The report forecasts that the Bank of Mum and Dad is set to lend £6.3bn by the end of this year, 10% more than the £5.7bn loaned last year, effectively making it the 11th largest mortgage lender in the UK.
Parents support more homebuyers than Help to Buy
According to UK Finance, the UK’s largest lender in 2018 was Lloyds, lending £42.5bn, followed by Nationwide lending £35.7bn and the Royal Bank of Scotland lending £30.5bn. While the Bank of Mum and Dad is far removed from these lenders, its figures are not to be derided, having supported more home buyers in one year that the government’s Help to Buy equity loan has helped in total.
An L&G spokesperson said: “In total, we estimate that the Bank of Mum and Dad will finance more than 250,000 house purchases in 2019, most of them helped by parents (181,000), with a minority receiving help from their grandparents (27,200) or other family and friends (51,200).
“And there’s little sign of this declining: among prospective buyers, 45% of those 35 and under, and 35% among all ages, expect to receive help from the Bank of Mum and Dad.”
The Legal and General report shows that it’s not just younger buyers getting financial assistance from their families. In their most recent home purchase, 36% of 35 to 44-year-olds and 22% of 45 to 54-year-olds have also been financially supported by their families.
Getting on today’s housing ladder is difficult for many, and more so for those whose parents are not in a financial position to help. However, there is a glimmer of hope; UK house price growth slowed to 3.3% in 2018, less than half the growth seen in 2016, so buyers will not see massive increases in property prices any time soon, keeping them within reach for now.
BuyAssociation has a range of investment opportunities available for purchasers using Help to Buy.