Bank of Family lending reaches £8.1bn in 2023
The Bank of Family has supposed 318,400 property purchases, equal to a record £8.1bn in lending, research has found.
Legal and General’s report into the Bank of Family, which is financial support from parents, grandparents and other family members, noted that just under half of homes bought by buyers under the age of 55 was bought with family support.
It added that if the Bank of Family was a bank it would be the ninth largest lender in the UK and the value of property bought so far this year comes to £124.5bn.
Most purchases come from parents, who account for 186,700 homes bought in 2023, while grandparents make up 39,800 homes and other friends and family make up the remaining 91,900.
The average support offered is around £25,600, around three quarters of the average deposit for a first-time buyer.
Legal and General said that 60% of contributors give the money as a gift and a further 13% offer it as a combination of a gift and a loan.
The report said that over three quarters of the Bank of Family goes towards some of the deposit and over half contribute all of it. In total, around 68% of the total value of Bank of Family goes towards deposits, equal to £5.6bn.
The remaining money goes towards costs such as legal, mortgage and surveyor fees, moving expenses and renovations, with only 8% using money to help with mortgage repayments.
Legal and General said that over half of the value of the intergenerational support goes to help first-time buyers, the report added.
The report said that Bank of Family support is over 2019 levels and the value of properties bought and lending is more than double pre-pandemic figures.
The report continued that the lending figure is expected to reach £10bn by 2025, aiding 357,200 purchases and with combined property value coming to £147bn.
One in five buyers said they would have to put their plans on hold for over five years without the Bank of Family and 10% said they would never be able to buy.
However, Legal and General said that around 69% of those who supported other to get on the property ladder said it had negatively impacted their financial position.
The research added that only 39% of Bank of Family recipients would receive professional advice from a mortgage broker or financial adviser before accepting help this year.
London and Southern regions needing most financial support
Within the Bank of Family statistics, there is regional variation, with two thirds of buyers in London receiving family support to purchase a property, The average gift or loan is pegged at £30,200.
The East of England reported the highest average gift at £32,100, with the South East taking third position at £26,600.
The West Midlands had the lowest average gift at £19,800, with the East Midlands rising to £20,000 and the North East coming to £20,200.
Urban properties accounted for 70% of the Bank of Family support and over two thirds of transactions, equal to around £82bn worth of housing in 2023.
Kevin Roberts, managing director, Legal and General Mortgage Services, said: “Up and down the country, the Bank of Family is making significant financial sacrifices to help family members onto the housing ladder.
“Support is concentrated in urban and Southern areas, where house prices are the highest, but is prevalent across the UK. While a brilliant lifeline for those able to draw on it, many people will not have access to such generosity and this widespread support is indicative of deep, underlying affordability issues affecting the UK.”
He continued that the Bank of Family was not only a major lender but also a “significant source of financial advice” as less than 40% of recipients seek professional guidance.
Roberts added that the gender dynamics were also interesting, with 46% of women saying they would speak to a financial adviser versus 30% of men.
Around 42% of men said they would depend on advice from friends versus 29% of women,
“In such a challenging economic climate, buyers must not overlook the insights that an adviser can bring to even the most complex of property transactions. Failing to do so could prove a very expensive mistake later down the line,” he added.