Parents are parting with thousands of pounds to help their children get on the property ladder, but they can’t afford to lend as much as they used to.
The average parental contribution for home buyers this year will be £18,000, down 17% from last year’s £21,600, according to Legal & General (L&G).
The drop shows that parents are “feeling the pinch”, the firm says.
Nonetheless, more than one in four buyers are still expected to receive financial help from friends or family.
In total, financial services firm L&G said 27% of home buyers would get assistance – up from 25% last year.
Despite the smaller sums being loaned, L&G said the so-called Bank of Mum and Dad was still “a prime mover” in the UK housing market.
L&G said almost 317,000 housing transactions this year would rely on at least some parental help.
However, overall lending was expected to drop to £5.7bn this year from £6.5bn in 2017.
Where buyers live also has a big impact on how much they rely on their parents for help. In London, the average parental contribution is £31,000 compared with £11,000 in Scotland.
Bank of Mum and Dad in numbers
- The “bank” is expected to help fund 317,000 homes this year, up 3% on 2017
- Contributions are highest in London and lowest in Scotland
- More buyers in London (41%) receive help from the Bank of Mum and Dad than in any other area
- Under-35s are most likely to receive help from their parents, with nearly three in five getting assistance
- Some older home buyers also rely on the Bank of Mum and Dad, with 20% of those aged between 45 and 55 receiving help
- “The volume of transactions depending on Bank of Mum and Dad funding keeps on growing, even as parents find it harder to provide as much money for the deposit.”
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Julian Kaye Dip PFS