Well, according to new research from Legal & General and financial services group Cebr they are certainly playing a major part. Research suggests that parents will lend £6.7bn this year, up dramatically from £5bn in 2016 (1).
The average financial contribution from The Bank of Mum and Dad (or BOMAD as some are calling it) has jumped by 23 %, providing deposits for over 298,000 mortgages and purchasing £75bn of homes (2).
The research estimates that BOMAD will actually finance 26 per cent of all mortgages in the UK in 2017, putting the Bank of Mum and Dad in the UK’s top ten lenders (1). Nearly 80 per cent of this lending is going to people under the age of 30, reflecting the difficulty for young people trying to get on the housing ladder (3).
Nigel Wilson, of Legal & General, said the research shows that the problem is “getting worse, not better” (2). Parental support continues to grow to help young people get on the housing ladder as, according to Mr Wilson, millennials don’t have the same advantages as their predecessors particularly in terms of housing prices.
Mr Wilson continued “The intergenerational inequality that creates the demand for BOMAD funding continues to widen – younger people today don’t have the same opportunities that the baby-boomers had, including affordable housing, defined benefit pensions and free university education. Parents want to help their kids get on in life”. (2)
Parents in the South West of England are the most generous, providing £30,000 of financial support on average, compared to £29,400 for parents living in London (2).
With much attention on mortgages a study from housing charity Shelter reminds us that some 450,000 adults across the UK also need the help with rent. Shelter estimated that the money spent by parents amounts to £850m a year on their children’s rent and £150m a year on moving costs (2).
Your home may be repossessed if you do not keep up repayments on your mortgage.