L&G’s findings show that parents are set to help to finance 25% of all UK mortgage transactions this year. This works out at an average loan of £17,500 per purchase. L&G claim that, if this lending was combined, it would represent as much as is lent by a top 10 mortgage lender.
Nigel Wilson, chief executive at the Legal and General said, “The Bank of Mum and Dad plays a vital role in helping young people to take their early steps on to the housing ladder,” . However, he also highlighted a number of important issues, including house prices being “out of sync with wages”.
He claims that in certain parts of the UK this funding is reaching ‘tipping point’ with over 50% of non-property wealth being spent on helping dependents get a foot on the property ladder.
Unfortunately not all young people who want to buy their first home can be helped by their parents and Mr Wilson added “We need to fix the housing market by revolutionising the supply side – if we build more houses, demand can be met at a sensible level and prices will stabilise relative to wages.”
L&G’s research indicated that parents will provide deposits for over 300,000 mortgages and represents 7% of the average purchase price.