‘Bank of Mum and Dad’ to lend over £5bn to help kids onto housing ladder
Legal & General (L&G) said the ‘Bank of Mum and Dad’ will provide deposits for over 300,000 mortgages and finance 25% of all UK mortgage transactions in 2016.
The average financial contribution will be £17,500 or 7% of the average purchase price, L&G said.
According to the report, the Bank of Mum and Dad is the equivalent of a top 10 mortgage lender in the UK and will be involved in 25% of all property transactions that take place in the UK market this year.
However, Nigel Wilson, chief executive of Legal & General, said the Bank of Mum and Dad could soon start to experience “a funding crisis of its own”.
The report said the Bank of Mum and Dad will not run into a nation-wide ‘funding crisis’ until 2035, but the regions with the highest and fastest growing house prices will face this problem much sooner.
London is already at its “tipping point” with 51% of average household net wealth (excluding property assets) going towards helping their children on the property ladder.
Wilson said: “If we are ever to end or reduce our reliance on the Bank of Mum and Dad (and Government initiatives such as Help to Buy 2) we need a new innovative approach to housing.
“Helping first-time buyers is necessary – but not the whole solution. We need to modernise housebuilding and make it more efficient so that we can increase supply and quality for all forms of tenure, and all income and age groups, from students to pensioners.”