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In recent weeks there have been a number of stories about the rising importance of the Bank of Mum and Dad when it comes to house purchases, with financial assistance from parents becoming almost a requirement for young buyers looking to get on the property ladder.
Recent research carried out by Legal & General and economics consultancy Cebr found that the Bank of Mum and Dad is now on a par with the ninth largest mortgage lender in the UK, with parents set to lend more than £6.5 billion to their offspring in 2017, up considerably even from last year’s total of £5 billion. Parents will help to pay for deposits on more than 298,000 mortgages and, by the end of 2017, will have been involved in around 26% of all the property transactions taking place.
Nearly half (42%) of would-be buyers are now turning to the Bank of Mum and Dad for support, with an average of £21,600 being lent. Millennials are by far the most likely to be receiving help from parents or loved ones, with 79% of Bank of Mum and Dad funding heading to those aged under 30.
A recent study conducted by Plentific backs up Legal & General’s findings, with their research also revealing that 26% of homeowners received money from their parents to assist them in buying a property. Their research also showed that the Bank of Mum and Dad are being relied upon to help out with home improvements, repairs and DIY projects as well.
What’s more, a report released in March by the Social Mobility Commission, a government advisory body, highlighted how the English property market is especially reliant on the Bank of Mum and Dad, with over a third of first-time buyers needing financial support from their family to get on the housing ladder.
High-end property consultants Savills, meanwhile, said family members provided £2.8 billion of financial help to buyers in England in the year to September 2016.
Rising house prices, the need for big deposits and ultra-low interest rates (which makes saving doubly hard) are just some of the reasons why young buyers are seeking financial assistance from elsewhere, while tougher mortgage regulations since the global financial crisis hit in 2008 have also played a part in making lenders more wary and less willing to lend to those with lower incomes.
As such, the Bank of Mum and Dad are helping to prop up the market more than ever before. Given how much this market is booming, it makes sense for you, as an estate agent, to target this demographic – whether it’s the parents themselves or their children – in your marketing.
The growing strength of the Bank of Mum and Dad is certainly something you should be keeping an eye on, capitalising on the recent boom and targeting your sales pitch to either parents looking to help out their kids by buying homes directly or young adults who are using financial support from their family to get a first foot on the property ladder.
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