House prices: 'Bank of mum and dad' lends £5bn a year
05-04-2016
British parents led their children an average £17,500 to help them get on property ladder
House prices: 'Bank of mum and dad' lends £5bn a year
British parents lend their children an average of £17,500 to get on the property ladder, meaning nationally, the "bank of mum and dad" will provide more than £5bn finance this year.
Around 25 per cent of mortgage transactions in 2016 will go ahead with family support, mortgage provider Legal & General (L&G) says. The sums involved would make Britain's parents a top ten UK mortgage lender if they really were a bank.
Around 300,000 mortgages will depend on parents helping to buy homes worth a total of £77bn this year, with an average contribution of seven per cent of the average house price.
Writing in the Daily Telegraph, L&G chief exec Nigel Wilson says "Bomad" – "the Bank of mum and dad" - has "generous" terms and conditions: "More than half of the money comes as a gift and where it is lent, the loans have long repayment periods and rarely charge interest."
However, the company warns that families are coming under increasing pressure, with property prices "out of sync" with wages.
The practice has reached "tipping point" in London, it says. More than half of average household net wealth in the capital, excluding property, is used to get children onto the property ladder, the BBC reports.
Wilson adds that most young people are not able to access parental support, while many of those fortunate enough to get a loan still can't afford to buy a house.
"What is very clear from our research is that Bomad on its own cannot solve the crisis of housing supply and affordability. It is neither available to enough people, nor sufficiently sustainable over the long term as care costs rise," he says.
He told the BBC: "We need to fix the housing market by revolutionising the supply side - if we build more houses, demand can be met at a sensible level and prices will stabilise relative to wages."
British parents lend their children an average of £17,500 to get on the property ladder, meaning nationally, the "bank of mum and dad" will provide more than £5bn finance this year.
Around 25 per cent of mortgage transactions in 2016 will go ahead with family support, mortgage provider Legal & General (L&G) says. The sums involved would make Britain's parents a top ten UK mortgage lender if they really were a bank.
Around 300,000 mortgages will depend on parents helping to buy homes worth a total of £77bn this year, with an average contribution of seven per cent of the average house price.
Writing in the Daily Telegraph, L&G chief exec Nigel Wilson says "Bomad" – "the Bank of mum and dad" - has "generous" terms and conditions: "More than half of the money comes as a gift and where it is lent, the loans have long repayment periods and rarely charge interest."
However, the company warns that families are coming under increasing pressure, with property prices "out of sync" with wages.
The practice has reached "tipping point" in London, it says. More than half of average household net wealth in the capital, excluding property, is used to get children onto the property ladder, the BBC reports.
"What is very clear from our research is that Bomad on its own cannot solve the crisis of housing supply and affordability. It is neither available to enough people, nor sufficiently sustainable over the long term as care costs rise," he says.
He told the BBC: "We need to fix the housing market by revolutionising the supply side - if we build more houses, demand can be met at a sensible level and prices will stabilise relative to wages."