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Bank of Mum and Dad becomes major lending sector

In a recent report into mortgage lending trends, it was found that Millennials’ reliance on parental support has turned the ‘bank of Mum and Dad’ into the 9th largest mortgage lender in the UK.

The report by Legal and General and economics consultancy Cebr, said parents will lend their offspring over £6.5 billion in 2017 (an increase from £5 billion in 2016) providing deposits for over 298,00 mortgages and accounting for 26% of all property transactions.

It’s predicted that this trend of the parental piggy bank lacks sustainability and by the year 2035 the average loan size will wipe out more than half a family’s available wealth. Of those buyers who receive family help, 57% get it in gift form, whilst 18% receive an interest free loan, leaving only 5% who clock up interest on their borrowing.

Rising house prices, alongside increased regulation and tighter lending rules were cited as key contributors to three quarters of this financial assistance being spent on a deposit. For those keen to step onto the property ladder in 2017, but struggling to afford the financial leap, it’s predicted 48% of prospective buyers will seek financial support from close family.

These statics paint an interesting picture for the future of mortgage lending and highlight a market gap for lenders with the ability to nurture first time buyers of the future.

Download the full report here.