Under-35s using Bank of Mum and Dad for 1 in 2 house purchases – L&G

One in every two first-time buyers under the age of 35 is receiving financial support from the Bank of Mum and Dad (BoMaD), according to new research from Legal & General and Cebr.

L&G’s research found that 56% of under-35s had received a financial gift to help them step onto the housing ladder.

In a further sign that the BoMaD is playing an “ever-present role” in the housing market, L&G suggested, 71% of these new homeowners say they would not have been likely to buy without financial support from family or friends. Instead, figures showed they would have to delay their housing plans by four years on average.

The research followed earlier findings from L&G that showed the BoMaD is stepping in to support loved ones as the economic impact of COVID-19 takes hold, with 33% of all people looking to buy in the next five years planning on getting financial help from family or friends.

L&G CEO, Nigel Wilson, described the BoMaD’s role in the UK housing market as “ubiquitous”.

“Across the UK, parents, grandparents, family and friends are digging into their pockets to help young, hopeful buyers and even growing families to make their housing plans a reality,” Wilson said. “These generous lenders are often funding most, or all of the deposit buyers need to step onto or up the ladder.

“But while the BoMaD is playing a clear and present role for many buyers, it remains a symptom of a broken housing market. Thousands of people simply don’t have a BoMaD to rely on. For those that do, generous family members are still having to draw on retirement savings and rainy day funds even as the country experiences its most significant economic challenge since the Second World War.”

The research indicated that over 2020, BoMaD ‘lenders’ will play an active role in 73,160 property purchases among those aged under 35 – just an 8% decrease from 2019 transaction levels (79,631), despite wider property purchases collapsing by nearly half during Q2 2020.

L&G also revealed that the BoMaD is lending an average £19,000 to first-time buyers under the age of 35, with 21% of respondents in this age bracket saying they received more than £30,000. In total in 2020, the under 35s will receive £1.36bn in BoMaD contributions, helping them to purchase £18.11bn worth of property.

However, not all first-time buyers will receive the funding as a gift, with the research suggesting that 30% expect to pay at least some of it back.

Commenting on the findings, Key CEO, Will Hale, said: “L&G’s research underlines how vital the BoMaD is in the housing market and that the stamp duty holiday on all purchases up to £500,000, which lasts until the end of March 2021, is playing a major role too. To a large extent, the BoMaD is filling the gap left by high street mortgage lenders, many of whom have stopped offering high LTV deals or have tightened criteria.

“Older generations have substantial property wealth with the over-65s alone owning homes worth more than £1.1trn and they are clearly focused on helping children and grandchildren where they can.”

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