Recent figures suggest that help from parents to get their children on the property ladder, will help to finance 25% of UK mortgage transactions this year, making The Bank of Mum and Dad one of the country’s top ten lenders.
It is estimated that parents will provide a total of £5 billion worth of deposits for more than 300,000 mortgages, purchasing homes worth £77bn.
But this comes with a warning that relying on parental support might soon be unsustainable as parents could be giving away more than they can afford. The report, from Legal & General pointed to the disparity between wage growth and house prices – with the latest official figures showing average annual pay rises of around 2% currently at a time of house price increases of 7.6%.
Its report said parental contributions already made up more than 50% of the wealth of the average household in London when property was excluded.
It described that scenario as a “tipping point” – adding: “Families clearly cannot continue to use all of their net wealth to help their offspring onto the housing ladder without putting their own financial stability at risk”.