Hello Bank of Mum and Dad
By Guest Blogger on 22 Sep 2016 in Buying
By Josh Cousens, abbotFox Estate Agents
The increasingly renowned Bank of Mum and Dad are expected to lend a helping hand to 25 per cent of UK property transactions this year. In numerical terms this means our parents are expected to fork out a combined total of over £5 billion, contributing to over 300,000 mortgages.
Each set of parents are anticipated to donate on average £17,500 of the typical purchase price in order to help their offspring onto the progressively hard to climb property ladder.
So why are we continuously having to depend on our parents to help us get a foot on the property ladder?
Since recuperating from the financial crisis, property market prices have been spiralling uphill at a quicker pace than salaries, which has made home ownership a much tougher achievement.
Although prices are much cheaper than in London, properties for sale in Norwich have also become a lot tougher for first time buyers to secure by themselves. Buyers are further hindered by the fact that mortgage lenders are being forced to request larger deposits.
The combined sum of hand-outs toward deposits will reportedly make the Bank of Mum and Dad the UK’s 9th biggest mortgage lender this year. So will this not have a knock on effect on the parents’ finances and put their own monetary stability at risk? Statistics show that in London, parental contributions have already made up more than 50 per cent of the wealth of the average household in the capital.
Accounts have indicated that some parents are deciding to downsize their property in order to free up some additional funds for their children to put towards their deposit. Other parents have revealed that the money used to get their children onto the property ladder would have been given to them later in life, as part of their inheritance, so to use it early makes little difference.
Of course not everybody has financially comfortable parents that are willing to help them secure their first property. A larger 75 per cent of the population may be in a position where they’re still seeking a method of finding their ever elusive deposit.