2019 sees Bank of Mum and Dad (BoMaD) digging even deeper

The Bank of Mum and Dad (BoMaD) forks out even more in 2019 as family and friends spend an average £6,000 more than in 2018 to help loved ones onto the housing ladder.

The new report from FTSE100 financial services group Legal & General and Cebr shows that, amidst a reduction in transaction volumes across the UK housing market, BoMaD will fund nearly 20% fewer property purchases than in 2018.

The jump in BoMaD loan sizes has increased total lending for the Bank of Mum and Dad by 10% this year – up to £6.3bn from £5.7bn in 2018. As a result, BoMaD is now the 11th largest mortgage lender in the UK.

Nigel Wilson, Group Chief Executive at Legal & General, said:

“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.

“The Bank of Mum and Dad is a symptom of Britain’s broken housing market and it 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 dependency, not generosity. It is socially divisive and it’s creating a ‘locked out’ generation of first-time buyers who aren’t lucky enough to benefit from this kind help. It’s also almost certainly eroding older people’s finances when they need it to fund care and retirement – parents, grandparents, even friends are digging ever-deeper into their savings and pensions.”

Key findings from Legal & General’s “Bank of Mum and Dad” research include:
  • BoMaD will continue to support thousands of buyers across the country in 2019 – involved in more than a quarter of a million (259,400) property purchases down from 316,600 transactions last year, but it still amounts to nearly one in five (19%) transactions in the UK mortgage market
  • BoMaD will help buyers to purchase property worth nearly £70bn this year
  • In the North West, the average BoMaD ‘loan’ has nearly doubled from £12,900 to more than £24,000
  • The South West saw the average contribution rise by over £10,000 to £29,700
  • BoMaD lenders in London are contributing the most to help family or friends onto the ladder (£31,000 per transaction on average), but those in Wales are also supporting loved ones to the tune of £30,600
  • Borrowers in the West Midlands are set to receive the least support (£13,700)
  • Nearly a fifth (19%) of BoMaD lenders were providing financial support because they felt it was their personal responsibility to help younger family members buy a home
  • Over three-quarters (77%) of those receiving support in 2019 are home movers, not first-time buyers, compared to less than two-thirds (62%) of home movers in 2018.

Propertymark resources

Propertymark has a range of help and support for agents and their clients when it comes to buying their homes, if it be their first, second or tenth. Agents can direct their customers through to the Propertymark website to view our First Time Buyers video, Help to Buy guide and more.

What Propertymark is doing

In march 201NAEA Propertymark responded to the consultation on the Proposed Land and Buildings Transaction Tax First-Time Buyers Relief in Scotland where we called for first time buyers to be relieved from Land and Building Transaction Tax.

NAEA Propertymark also released the Housing Beyond 2025 report where key statistics found are shared which includes first time buyers relying on parents and family to get onto the property ladder.

NAEA Propertymark’s latest Housing Market Report breaks down the latest findings from NAEA members across the UK, Scotland and Wales.

 

Kindly shared by NAEA Propertymark