You are here: Home - Mortgages - First Time Buyer - News -

‘Bank of Mum and Dad’ to lend over £5bn to help kids onto housing ladder

Written by:
British parents will lend their children more than £5bn this year to help them get on, or move up the property ladder, according to research.

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.”

Related Posts

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Everything you need to know about being furloughed

Few people had heard of ‘furlough’ before March 2020, but the coronavirus pandemic thrust the idea of bein...

The savings accounts paying the most interest

If one of your jobs this month is to get your finances in order, moving your savings to a higher paying deal i...

Coronavirus and your finances: what help can you get in the second lockdown?

News and updates on everything to do with coronavirus and your personal finances.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week

Read previous post:
60 second news round-up: the top money stories of the week

Missed this week's big money stories? Here's our one minute summary of the key facts and figures from the last...