Homebuyers are more reliant than ever on the bank of mum and dad funding nearly a quarter of all housing transactions.
Demand from first time buyers and home movers to buy a home has seen a greater reliance on the bank of mum and dad according to research from Legal & General almost a quarter or 23% or transactions.
The housing market has been hit by the Coronavirus pandemic with loans from family and friends down to £3.49 billion this year and homebuyers are now more reliant on financial support from.
Loans from family were £6.26 billion in 2019 and although the figure for 2020 is lower, 175,000 first time buyers and home movers transactions involve the bank of mum and dad.
Londoners receive the most help
The average contribution for financial support is £20,000 and homebuyers living in London received the most at £25,800 with the average property value of £480,425.
This table from Legal & General shows the house price and contribution from the bank of mum and dad for UK regions.
| Region | House price | Contribution |
|---|---|---|
| London | £480,425 | £25,800 |
| East Midlands | £200,513 | £24,100 |
| South East | £327,413 | £23,900 |
| Wales | £169,489 | £23,900 |
| East of England | £295,640 | £22,500 |
| South West | £255,891 | £18,600 |
| West Midlands | £202,093 | £15,800 |
| North West | £167,809 | £15,600 |
| Scotland | £153,281 | £15,500 |
| Yorkshire & Humber | £165,561 | £13,800 |
| North East | £125,938 | £13,800 |
After London the next highest contribution was for buyers in the East Midlands receiving £24,100 up significantly from £16,000 in 2019, followed by South East and Wales with £23,900.
Since the Coronavirus pandemic parents and family have become more generous with 15% planning to lend more than they intended before the crisis began.
Of those that said they would offer more due to the Coronavirus, one in eight would be willing to give 50% more money.
With more support from the bank of mum and dad homebuyers may be better placed to compete against buy-to-let investors for their new homes.
Help with the deposit for a new home can come from family members as the equity release buyer can access cash using a lifetime mortgage and gift to a child or grandchild.
Strong support across the country
Loans from family and friends when buying a home is strong across the whole country and 65% of homebuyers said they would not be able to buy without this support.
The region with the highest share of homeowners receiving help from the bank of mum and dad is 41% in London followed by 27% in the West Midlands and Scotland.
Regions with the least share of support are East of England where only 15% of buyers receive a contribution followed by the North East with 16% and Yorkshire & Humber on 19%.
To provide support 39% of family and friends use cash savings and 12% are intending to downsize to release cash.
Rather than downsize, rising house prices since the last financial crisis could allow remortgage buyers to release cash to help support their children get on the property ladder.
The bank of mum and dad is an important element supporting the recovery of the house market since it has been reopened.
What are your next steps?
Speak to our LCM mortgage advisers if you are planning to move home, buying your first home, remortgaging your existing home to a new cost effective mortgage deal or are a buy-to-let investor.
Learn more by using the mortgage cost calculators, equity release mortgage calculator and property value tracker chart. Start with a free mortgage quote or call us and we can take your details.
For equity release buyers our London City Mortgage brokers can recommend lifetime mortgages allowing you to receive cash from your property for conservatory extension, holidays or even give to a family member.
