The cost-of-living crisis is hitting everyone hard, but it’s particularly tough for young people trying to buy their first home. And who are they turning to for help? Mum and Dad, of course!
New figures show that parents are expected to hand over a staggering £30 billion to their children over the next three years to help them get onto the property ladder. That’s a lot of money!
This “Bank of Mum and Dad” is already making a huge difference. In 2023 alone, parents gave or loaned £9.4 billion to their children, helping over 164,000 first-time buyers purchase a home.
That’s 57% of all first-time buyers with mortgages who got help from their family. This is the highest number since 2012, and a 10% jump from the year before.
Why Are Parents Stepping In?
The recent rise in mortgage rates has made it incredibly difficult for young people to get a mortgage. With rising living costs and high rents, saving for a deposit has also become a major challenge.
This means many first-time buyers are turning to their parents for help. While the total number of first-time buyers getting family support has dropped from a peak of 198,000 in 2021, the amount of money being given or loaned has nearly doubled since 2019.
Frances McDonald, an expert in housing research, explains: “With higher mortgage rates and stricter lending rules, it’s become a lot tougher for first-time buyers. Parents are stepping in to give their children the financial boost they need to get onto the housing ladder.”
What Does The Future Hold?
While mortgage rates have started to fall recently, experts believe that it will still be difficult for many young people to buy their own home without help.
Savills, the property agents who collected these figures, predict that the number of first-time buyers needing help from their parents will decrease slightly this year, but will still be significant. They expect that around 54% of first-time buyers will need financial assistance from their families.
A Tough Time For First-Time Buyers
The experts at Savills say that while mortgage rates are falling, it’s still a very competitive market. Lenders are only willing to give loans to those with good credit scores and stable jobs. This makes it very difficult for those who don’t have the luxury of family support.