Published: 04/09/2020“The Bank of Mum and Dad will be a driving force behind the very significant uplift in transaction levels in the UK’s housing market, as buyers struggle with the economic impact of the COVID-19 crisis. With the housing market now re-opened, BMD is ready to step up and be an increasingly vital element of the housing sector, as thousands of buyers press ahead with their plans to buy after the lockdown”, says Nick Pearce, MD of Circa London.
- Last year, 19% of all home purchases were funded wholly or partly by the Bank of Mum and Dad.
- In 2020 that figure will rise to nearly a quarter (23%).
- Of those who’ve bought recently and received support from family and friends, 65% said it would have been ‘unlikely’ without help from BMD.
- One in five (19%) expect they would have had to delay their purchase by more than five years without BMD support.
- 14% said they would never have been able to buy without the help of family or friends.
The figures come as buyers face the economic implications of the pandemic and a restriction in the choice of high loan-to-value (LTV) mortgages, which many buyers (especially first-time buyers) rely upon. Recent data from Moneyfacts has shown a dramatic fall in the number of 90% LTV mortgages on the market, which allow people to buy with just a 10% deposit.
Research shows that the coronavirus crisis has encouraged BMD lenders to be even more generous than usual.
- This year, family members and friends will lend an average of £20,000 towards deposits.
- As a result of the crisis, 15% of BMD ‘lenders’ are now planning to give more than they would have done before the pandemic, to help their loved ones.
- Of those saying that coronavirus has changed the amount of money they are willing to give, almost one in five (18%) want to give at least 50% more.
The Bank of Mum and Dad might be an imperfect solution to an intergenerational problem, but it has also become an established and vital part of the housing landscape.