Nearly half of all first-time buyer housing transactions this year are being financed by the ‘bank of mum and dad’, according to a new property forecast, shared with City A.M. this afternoon.
Total contributions from parents helping younger generations to buy a home are expected to reach £9.8bn in 2021, analysis from property group
This equates to an average of just over £58,000 in gifts or loans for each supported house purchase. Rising house prices have increased the pressure on those saving for a deposit,
This year is expected to represent a peak of family support, with total contributions projected to fall in 2022 to £7.9bn increasing to £8.6bn in 2023 as family support continues to be a vital source of funding.
In 2020, many low deposit deals vanished from the market in the uncertain economy, but more recently lenders have been bringing them back.
Parents were calculated by
First-time buyer numbers were impacted in 2020 by lockdown and employment uncertainty,
Over the past 10 years, the bank of mum and dad has subsidised first-time buyer activity to the tune of £53.9bn, helping nearly 1.4 million buyers access their first home, according to Savills’ calculations.
“While we expect lending at a higher loan-to-value ratio to continue to be available, slowly rising interest rates will act as a brake on affordability.”
Rising living costs will also make saving for a deposit more challenging, she said, adding: “As such, for those fortunate enough to be able to access it, family support will continue to be a vital source of funding for first time buyers, particularly in a post Help to Buy environment.”
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