The Bank of Mum and Dad (BoMaD) is set to lend £6.5 billion in 2017, up from £5 billion in 2016, to help their grown-up children get on the property ladder. For many young adults, the reality is you can’t leave home without it.
Following a year of rising prices and slow wage growth, home ownership is out of reach for ever more prospective buyers. This is where the bank of Mum and Dad often steps in. About half of first time buyers expect to get some help. With such low mortgage rates, it is not the repayments that are an issue but raising the large deposits required.
According to research by Legal & General, BoMaD will provide deposits for more than 298,000 mortgages this year, helping to purchase homes worth up to £75 billion.
This accounts for 26% of all property purchases taking place, putting BoMaD level with the 9th biggest mortgage lender in the UK.
BoMaD funding has also risen to £21,600 this year, up from £17,500 a year ago.
Adults under the age of 30 are the biggest receivers of BoMaD, accounting for 79% of funding.
Parents in the South West provide the most financial support (£30,000) to their children compared to London (£29,400), while parents in Scotland (£15,500) and Wales (£12,500) contribute the least funding.