The Bank of Mum and Dad will provide funding towards around a quarter of property purchases this year, according to research.
By the end of this year, friends and family will have helped 316,600 loved ones to buy a home, up from 298,000 in 2017.
The study, carried out by Legal & General and Cebr, calculates that the Bank of Mum and Dad will be equivalent to a £5.7 billion mortgage lender this year, supporting property purchases worth a total of more than £81 billion.
The average contribution to a property purchase by friends and family is on the decline, however. The typical sum lent for a property purchase this year will dip to £18,000 after peaking at £21,600 last year.
“The fact that in 2018, one in four housing transactions will be dependent on the Bank of Mum and Dad, while hard-pressed parents are finding it more difficult to provide the funds to help their family with deposits, will further exacerbate the UK’s housing crisis,” says Nigel Wilson, group chief executive at Legal & General.
“We need to build more homes for the young, old and families alike – more quickly and cost effectively,” he says.
“The volume of transactions depending on Bank of Mum and Dad funding keeps on growing, even as parents find it harder to provide as much money for the deposit. [This] funding is a vital plank in the housing market, but this year the supply of funds is being squeezed.”
“This is not a positive trend - nor is it sustainable or fair for our parents (the lenders) and young people (the borrowers) to remain so co-dependent when it comes to housing purchases,” Wilson concludes.