Gifts and loans from the Bank of Mum & Dad (BOMAD) totalled £9.4bn in 2023, analysis by property firm Savills has shown.

This amount has almost doubled since 2019 due to a more stringent mortgage market and higher mortgage rates.

In total, Savills has estimated that 164,000 first-time buyers had family assistance in buying their first home last year, accounting for 57% of all mortgaged first-time buyers.

While the number of assisted buyers is down from a peak of 198,000 in 2021, the latest figure is 10% up on 2022 and is the highest proportion of first-time buyers receiving help since 2012.

“While many homebuyers enjoyed record low interest rates during the early part of the decade, more stringent mortgage requirements, which have been in place since the start of the pandemic, have impacted higher LTV lending, most commonly used by first-time buyers,” director of residential research at Savills, Frances McDonald, said.

She also suggested that record rental growth and increased mortgage rates, particularly for high LTV products, have acted as a “further blow” to first-time buyers’ homeowning aspirations.

“As a result, a greater proportion have needed support to get onto the housing ladder, and those who were able to, took advantage of family support to try and secure a deal at a lower mortgage rate,” McDonald added.

Average quoted mortgage rates for 90% and 95% LTV rates were 5.66% and 6.08% in July 2024, respectively, according to the Bank of England (BoE). Although these rates have come down from their respective peaks, they have increased significantly in the last two years.

As mortgage rates continue to decrease, Savills has forecast that a smaller proportion of first-time buyers are likely to need support from the BOMAD.

The property firm has still forecast that the total contribution towards first-time buyer purchases this year will remain in line with 2023 levels, at £9.3bn. Savills is expecting a total of almost £30bn to be paid out over the next three years.

“Despite the BoE’s recent decision to cut the base rate, we expect that lenders will continue to favour less risky, lower LTV mortgage lending,” added McDonald. “This means that buyers will still have a hard time getting their first foot on the housing ladder.”

“Those who have the option of family support and are secure in their employment will find it much easier to get onto the housing ladder and only the highest earners and those who have received significant support are likely to be able to buy at the top end of the market.”

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