The Bank of Mum and Dad is expected to lend over £6.5 billion to first-time buyers looking to get on the property ladder this year.
According to a report by Legal & General and economics consultancy Cebr, this figure has increased by 30% from £5 billion in 2016.
This will help buyers purchase homes worth £75 billion, providing deposits for over 298,000 mortgages.
The Bank of Mum and Dad is now on a par with the ninth largest mortgage lender in the UK- up one place from last year – and will be involved in 26% of all property transactions that take place in the UK market in 2017.
The report also found that only 40% of parents provide equal financial support to their kids.
National house price differentials make little difference to the Bank of Mum and Dad’s criteria for extending support – most parents provide a fixed amount of financial help, regardless of where their kids choose to live – only one in five were prepared to provide more help for kids living in pricier areas. However, two in five homeowners in London (39%) receive Bank of Mum and Dad help.
Nigel Wilson, CEO of Legal & General, said: “The intergenerational inequality that creates the demand for Bank of Mum and Dad funding continues to widen – younger people today don’t have the same opportunities that the baby-boomers had, including affordable housing, defined benefit pensions and free university education. Parents want to help their kids get on in life, and the Bank of Mum and Dad is a testament to their generosity, but it is also a symptom of our broken housing market.
“The UK is experiencing a supply-side crisis in housing – we are simply not building enough houses. We need to build more homes for the young, old and families alike – more quickly and cost effectively. Legal & General is playing our part by building and financing thousands of new homes. As well as providing much needed new properties, it will also deliver economic growth and new jobs.
“This is the second year of our Bank of Mum and Dad research programme and the statistics show the problem is getting worse, not better. Transaction volumes are down in the housing market but funding is growing exponentially. This is not a good thing, nor is it sustainable or equitable for our parents (the lenders) and young people (the borrowers).
“We need real action to fix the housing market and restore affordability for all. Institutions like Legal & General can regenerate not just residential housing, but the towns and cities in which the homes are built. Infrastructure, jobs and local economic growth are all key to creating thriving communities where people want to live.”
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