Young homebuyers are increasingly reliant on funding from friends and family, which is this year expected to rise to £6.5bn.
The “bank of mum and dad” now helps fund more than a quarter of property purchases, according to new research.
Figures from Legal & General and economics consultancy Cebr suggest young homebuyers are increasingly reliant on their parents, with family and friends expected to lend more than £6.5bn in 2017 for purchases, up from £5bn last year. The money is helping to provide deposits for more than 298,000 mortgages to help buy homes worth £75bn, and means the bank of mum and dad is involved in 26% of transactions.
That puts it on a par with the UK’s ninth biggest mortgage lender, Yorkshire Building Society, according to the report. Legal & General chief executive Nigel Wilson said: “The bank of mum and dad continues to grow in importance in helping young people take early steps onto the housing ladder.”
But he said that while this was a testament to parents’ generosity as their children get on or move up the housing ladder it was also a symptom of the “broken housing market”, with not enough homes being built.
Mr Wilson pointed to the affordable housing, defined benefit pensions schemes and free university education that helped older generations but was no longer available to their children.
The new figures indicate that while in 2016 a third of prospective homeowners received financial help from friends and family, the level is set to jump to 42% this year.
Meanwhile the scale of assistance has risen from an average £17,500 to £21,600 and millennials – those under 30 – are the biggest recipients of the funding, the report said. However the bank of mum and dad is set to fund a smaller number of purchases in 2017 – down from 306,000 to 298,000 – but only because overall housing market transactions are down, it added.