Brothers and sisters surpass grandparents for first-time buyer deposit help
Siblings putting money towards a first-time buyer’s house deposit has accounted for a record 11% of family contributions so far this year, data from a lender and estate agency showed.
Analysis from Hamptons using data from Skipton Building Society revealed this had more than doubled from 5% of contributions five years ago. The contributions made by siblings have also outstripped grandparents, which currently sits at 8%. This is the first time the donation of siblings has gone beyond the gifting of grandparents.
So far in 2023, siblings have given an average of £10,250 towards a deposit while grandparents gift £10,000.
Parents are still the biggest form of familial support as they have accounted for 72% of deposit contributions so far this year at an average of £15,250.
Aunts and uncles make up 4% of contributions and give £15,000 on average, while other family members account for 3% of deposit gifting at an average of £14,000.
Just 1% of deposit contributions were made by sons or daughters, who gave £15,750 on average.
Family deposits going further
Altogether, family contributions have made up 63% of first-time buyer deposits this year. This has typically helped these buyers to put down a larger deposit, as the data showed those with family contributions had a deposit of at least 20%. This was compared to the 16% average deposit size from those with no family help.
Additionally, first-time buyers who receive help from their families are able to buy a more expensive home.
Buyers with help paid £257,290 on average for their first home, which was £6,500 more than those without any contributions.
It also sped up the time it took for first-time buyers to get onto the property ladder, as the average person with familial support bought their first home at age 31.3, compared to 32.5 years for people who saved up by themselves.
Similarly to mortgage activity overall, higher interest rates have dampened gifting from family members. Some 32% of first-time buyers received a contribution towards their deposit so far this year. While this was higher than 30% last year, it was lower than when Skipton’s records began and 40% of first-time buyers were gifted money.
More support in Yorkshire and The Humber
First-time buyers in Yorkshire and The Humber were the most likely to have support from their family with 40% of buyers receiving some kind of contribution. This was up from 31% last year. The average gift size was the second smallest across Great Britain at £9,770 due to the lower than average house prices.
In Scotland, 27% of first-time buyers had help from their family, which was the lower proportion across all regions and nations.
First-time buyers in London received the largest contribution at an average of £34,270, which was significantly higher than the national average of £14,220.
Lack of homeowning parents?
Aneisha Beveridge, head of research at Hamptons, said: “Children are much more likely to become homeowners if their parents already own a home. But is the bank of Mum and Dad running dry? As homeownership rates decline through the generations, younger parents today are less likely to be homeowners than their predecessors, which reduces their ability to withdraw equity from their home to pass on to children.
“Rather, first-time buyers are increasingly leaning towards other family members to boost their deposits. Siblings are at the forefront with older brothers and sisters at the more affluent end of the spectrum putting their hands in their pockets. They are highly likely to already be homeowners who want to help their younger siblings take their first step onto the property ladder.”
She added: “Should interest rates stay higher for longer, it will exacerbate the gap between what those with and without family help can afford. Those without help will likely face saving up for longer and buying later in life or purchasing a smaller home in a more affordable area to keep their mortgage payments within their means.”
Charlotte Harrison, interim CEO of home financing at Skipton Building Society, said: “The research highlights just how much financial support is needed for first-time buyers in the current climate and the lengths that not just the Bank of Mum and Dad, but their wider families are now having to go to, to help their loved ones take a step up onto the property ladder.
“With high property prices, escalating rents and the cost-of-living squeeze further impacting people’s ability to save for a house deposit – it’s making it almost impossible for people to get onto the property ladder without a boost to their savings. For many, despite potentially being able to pass a typical mortgage affordability check – it’s the lack of a deposit that’s holding them back from their home ownership aspirations.”
She added: “Support from the ‘family bank’ in this way is a real boost to first-time buyers’ purchasing power, giving them a head start onto the property ladder much earlier than what they’d have achieved on their own. However, we know not everyone is lucky enough to have access to family wealth in this way, which is why other alternative routes to homeownership without the need for family wealth are so critical.”