03 May 2016

'Bank of Mum & Dad' now one of UK's biggest lenders

'Bank of Mum & Dad' now one of UK's biggest lenders

 

The so-called 'Bank of Mum & Dad' is now one of the UK's biggest lenders, according to a new study.

A new report into the role parents play in helping their children get on, or move up the property ladder reveals that the Bank of Mum & Dad will lend over £5billion in 2016, providing deposits for over 300,000 mortgages and  purchasing homes worth £77billion in 2016.

The lending is the equivalent of a top 10 mortgage provider in the UK and will be involved in 25% of all property transactions that take place this year.

Loans with no interest

Legal & General, which carried out the research, said younger people today don’t have the advantages the baby-boomers had, including cheap housing that delivered windfall gains.

The study found: 

  • In 2016, family and friends will help 300,000 of their loved ones to buy a home
  • The Bank of Mum and Dad will help to finance 25% of all UK mortgage transactions in 2016
  • The Bank of Mum and Dad’s average financial contribution is £17,500 or 7% of the average purchase price;
  • Over three quarters of “BoMaD” purchases – 256,400 of them – will be assisted by the buyer’s parents - with a further 22,500 and 27,000 supported by grandparents and other family members/friends respectively;
  • 57% of Bank of Mum and Dad contributions are gifts, 18% are loans with no interest and 5% are loans with interest;
  • £5bn of mortgages will be supported by BoMaD in 2016, making the Bank of Mum and Dad a top 10 lender

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