Nearly a half of respondents to a Legal & General Mortgage Club survey looking at the impact of family financing on UK housing transactions found that 45 per cent of respondents cited ‘the bank of mum and dad’ as a major contributor to buying their first home.
The findings underline just how important family financing is despite the relative resurgence the market has seen and with assistance schemes such as Help to Buy and Funding for Lending Scheme coming into force.
According to the Legal & General survey of 2000 UK homeowners, 45 per cent of UK borrowers have relied on the help of ‘the bank of mum and dad’. 28 per cent of these buyers needed family financing to buy their current home and 17 per cent needed it to secure their first home. The region most reliant on ‘the bank of mum and dad’ was East Midlands with 55 per cent of those surveyed saying they would not have bought their home without parental assistance followed closely by the North West (42 per cent) and the South East (32 per cent). Meanwhile buyers in Scotland (8 per cent) and the West Midlands (19 per cent) were the most self sufficient.
Ben Thompson, MD, Legal & General Mortgage Club, said: “The bank of mum and dad continues to play a fundamental role for many buyers and despite the wealth of positive data about the market at the moment dependence on family financing to buy our homes is still a crucial factor.”
“It’s great for the beneficiaries that some parents are able to support their children in this way. But continual house price rises are not necessarily a good thing. The more house prices stretch beyond the reach of our children, the more the Bank of Mum and Dad will have to fill in the gap between budgets and asking prices. Instead a balanced market, with significantly increased supply, is what’s needed to restore lasting stability to the UK housing market.”
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This doesn’t surprise me in the slightest…
My reason for agreeing with this is largely down to the fact that many parents will feel as though they will be living with their children for the rest of their lives if somebody doesn’t give them a helping hand. And if they are jobless like so many young people these days buying a home for themselves is hardly a priority.
The housing market is improving and so are ways of young buyers getting onto the market, but until the amount of young people in work improves I cant see much of a change in the fact mums and dads will be the ones funding their children moving out, wouldn’t you agree?