‘Bank of Mum and Dad’ feels the pinch.
For many millenials, it has become the only route to owning your own property; with the country in the middle of housing crisis and home ownership plummeting among younger people, the so called ‘Bank of Mum and Dad’ leant £ 6.5 Billion in 2017, to help their children get onto the property ladder. But, as recent research shows, maybe parents are beginning to feel the pinch as far as their contribution is concerned.
In 2017, the “bank” supported the purchase of £75bn worth of property, making it the equivalent of a top 10 mortgage lender. This also equates to an average of £21,600 put down on a deposit per family. Of this figure, 34% of these purchases were for first-time buyers.
Recent data from Legal & General (L&G), shows that the average parental contribution for home buyers this year will be £18,000 – down 17%. The drop shows that parents are also “feeling the pinch”. Nonetheless, more than one in four buyers are still expected to receive financial help from friends or family.
Despite this drop, 27% of home buyers would still be getting assistance from parents – up from 25% last year, making them still a major contributor to home sales in the UK market.
As the Prime Minister, Theresa May, made the housing crisis her ‘personal mission’ to fix, back in November 2017, it is clear to see why. The proportion of young people embarking on home ownership has fallen significantly in the past 20 years. According to the Social Mobility Commission, in 1990 almost 40% of 20 – 24-year-olds bought their own homes. By 2010, it was 13%. Those aged between 25 and 29 fared slightly better, but the figure still fell significantly, from 63% to 34%, in the same period.