If you’re a parent then today’s housing news may come as little surprise: the ‘bank of mum and dad’ is now the equivalent of a top ten mortgage lender in the UK.
Research by Legal & General and the Centre for Economics and Business Research has found that parents helping their children on to the property ladder have become such a crucial part of the housing market that they will be involved in a quarter of all property transactions this year.
Rising house prices, years without real-terms wage rises, a shortage of supply and tougher mortgage regulations since the financial crisis have made it difficult for first-time buyers to get on the ladder. So family members have stepped in. Parents give their children around £17,500 on average to help get them on the property ladder, adding up to a staggering £5 billion per year.
Louisa Fletcher, a property expert, told the BBC: ‘We’re looking at house prices in many areas back to post-crisis highs, and realistically I think that’s only going to continue, so I can only see the bank of mum and dad probably growing in stature as one of the biggest lenders.
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