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Average Bank of Mum and Dad mortgage contribution rises by £6,000

The Bank of Mum and Dad (BoMaD) is currently spending an average of £6,000 more than in 2018 to help loved ones onto the housing ladder, Legal & General has found.

The new report shows that, amidst a reduction in transaction volumes across the UK housing market, BoMaD will fund nearly 20% fewer property purchases than in 2018.

However, BoMaD lenders will be more generous this year than ever before, with the average contribution increasing to £24,100 – over £6,000 more than last year’s average contribution of £18,000. This rise is double the average UK house price increase of £3,000 in the year to March 2019.


What’s more, the jump in BoMaD loan sizes has increased total lending for the Bank of Mum and Dad by 10% this year – to £6.3 billion from £5.7 billion in 2018.

Despite the decrease in transaction volumes, Legal & General says BoMaD will still continue to support thousands of buyers across the country in 2019 – involved in more than a quarter of a million (259,400) property purchases.

This is down from 316,600 transactions in 2018, but still amounts to 19% of UK mortgage market transactions. In total, BoMaD will help buyers to purchase property worth nearly £70 billion this year.

On a regional scale, the average BoMaD ‘loan’ in the North West has nearly doubled from £12,900 to more than £24,000, while the South West saw the average contribution rise by over £10,000 to £29,700.

According to Legal & General, the shift in loan size could be because BoMaD lenders are supporting family and friends to purchase larger properties. Three-bedroom houses or flats were the most commonly purchased properties in 2019 (44%), while 38% have helped family or friends to buy a two-bedroom property, and 15% are helping loved ones to purchase properties with four or more bedrooms.

This year’s findings also suggest that BoMaD is playing a more complex role in the housing market. Millennials continue to rely on their parents the most, with 62% needing financial support from their parents or other family members and friends.

However, the findings show that more than a fifth (22%) of people aged 45-54 have received financial assistance from BoMaD to purchase a property.

Around 7% of over-55s have also received help from family or friends to buy their most recent home. This support for older buyers is predicted to double, with 14% of Britain’s over-55s expecting assistance from BoMaD for a future house purchase.

Nigel Wilson, group chief executive at Legal & General, commented: “The Bank of Mum and Dad continues to be the ‘iceberg’ mortgage lender beneath the surface of our housing market – all but invisible yet exerting a massive influence, funding purchases across the country and helping people to defy the economics of affordability and realise their housing dreams.”

“This year, parents or grandparents, family or friends are set to lend thousands more to fund nearly one in five house purchases.”

He described the Bank of Mum and Dad as ‘a symptom of Britain’s broken housing market’ which goes far beyond millennials relying on their parents as more older borrowers look to family and friends for financial support.

“Our reliance on BoMaD funding is an increasingly skewed facet of the UK housing market. It’s dependence, not generosity,” Wilson continued. “It’s socially divisive and it’s creating a ‘locked out’ generation of first-time buyers who aren’t lucky enough to benefit from this kind of help.”

Wilson went on to say that the Bank of Mum and Dad is ‘eroding’ older people’s finances when they need it to fund care and retirement; parents, grandparents and even friends are digging deeper into their savings and pensions.

He said parents are expected to make the biggest contribution to family members in 2019 and will be responsible for £4.4 billion of lending, while grandparents will lend £657 million. Other family members and friends will help more than 51,000 buyers by lending a staggering 1.2 billion to help loved ones purchase a property.

“Most BoMaD lenders are using cash savings (53%), but this year unlocking housing wealth through equity release has jumped to become the third largest source of funds at 16%,” Wilson concluded.

Legal & General’s research also found that the Bank of Mum and Dad’s role is set to grow even further. More than a third (35%) of prospective buyers who are planning to purchase a home in the next five years to expect to rely on financial support from their family.


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