100,000 homebuyers use bank of mum and dad
According to HSBC, financial help from family members have made a significant contribution to the first time buyer market during this period, enabling roughly £23bn worth of first home buys, or £5.6bn a year.
Peter Dockar, head of mortgages at HSBC, said: “It’s obvious that the ‘bank of mum and dad’ has stepped in to plug the gap left by those banks and building societies who have constricted their lending in recent years, which means that family support has become an important element of the post-crisis financing mix.”
First time buyers point to tough mortgage market conditions as to the reason for asking for help from their families.
Approximately 85% of survey responses for those FTBs who secured family financing indicated that they turned to it because it was less risky, cheaper and was less stressful than some traditional mortgages.
Only 15% of responses indicated FTB’s main motivation was to buy a more desirable home in a better location.
The HSBC/Cebr report also considers how family financing’s contribution to the FTB market is likely to change between 2012 and 2017.
According to its predictions, only 11.0% of FTB transaction values will rely on family financing by 2017, compared with 18.7% in 2011.
However despite the decline, family financing is still set to be hugely important for those looking to get onto the property ladder, even in 2017.