Parents and grandparents had a hand in helping three in every five (61%) first-time buyers (FTBs) get on the property ladder in the last five years, research from Just Group has revealed.
That’s up from only one in five (20%) of first-time buyers who purchased a property over 30 years ago.
The research, part of Just Group’s My Home, My Future survey of 4,000 people, shows the percentage of FTBs relying on family funds has tripled in the last 30 years, reaching a peak of 67% in 2009-2013. The pressure on mum and dad to finance FTBs from 2014 or after has cooled off slightly but is still far higher than it was pre-2009, and triple what it was 30 years ago.
The Bank of Mum and Dad is now one of the biggest lenders alongside traditional forms of financing. As homeownership using their own resources slips further out of reach for many of the younger generation, the Bank of Mum and Dad is predicted to fill the gap and provide £6.3bn worth of loans this year.
Stephen Lowe, Just Group’s communications director, said: “Over the last 30 years, approximately the time it takes to pay off a mortgage, the number of first-time buyers needing help from family to clamber onto the property ladder has tripled. Owning your own home is a deeply held ideal in our national psyche and today’s younger generation can see the financial and emotional benefits of getting onto the property ladder. But for many, unless they can count on financial help from family it seems to be slipping further out of their reach.
“The sharp increase in property wealth in recent years has fuelled debate on whether the older generation has benefitted at the expense of the young. Whatever your view, it’s clear the Bank of Mum and Dad has increasingly stepped in to help their children on to the property ladder. But how deep are the Bank of Mum and Dad’s pockets?
“People in their 50s are often referred to as the ‘sandwich generation’ – caught between supporting their children and their parents. For this group, planning for their own retirement is often pushed to the back burner while they deal with the day to day pressures – even though more than half of people in their 50s told us they are concerned about not having enough to retire on.
“It’s important that parents and grandparents balance their own long-term needs against their desire to help their family. Take stock of your financial situation before making any big decisions – it’s important to understand the long-term implications for everyone. There are lots of resources available, from meeting a regulated financial adviser through to the free and impartial guidance given by the Money Advice Service or Pension Wise.”
Just Group’s research also reveals the UK hotspots where the Bank of Mum of Dad is most called upon. FTBs in London and the North East are the most dependent on help from family compared to those in the Midlands and East regions who are almost half as likely to need this help.
Over half of renters (55%) across the UK say they have dreamt of owning their own home, and as many as two-thirds (68%) of renters in their 20s have this aspiration, the highest amongst all age groups. But the reality is that millennial families are half as likely to own their own home by the age of 30 as baby boomers were by the same age.