Who is the unexpected major player in the mortgage market?
If you were to list the biggest mortgage lenders in the UK, there’s a fair chance most of us would be able to guess the big names.
However, just outside the top 10 is a lender, who not everyone can access – it’s the Bank of Mum and Dad, which is now thought to be the 11th largest mortgage lender in the country.
Putting its position into context, it’s more of a player than the Help to Buy schemes in aiding younger buyers to step on to the property ladder.
Parents will lend almost £7 billion to potential homeowners this year, which is a 10% increase on 2018, according to Legal & General’s ‘Bank of Mum and Dad 2019’ report.
In 2018, 316,600 properties were bought using family deposits but this has fallen to 259,400 in 2019 as many wait to see what Brexit will do before committing.
The report showed friends are set to lend their loved ones £6,000 more in 2019 than they did a year earlier with £24,100 being loaned to their younger relatives in total.
This helping hand is £6.26 billion worth of lending, which will fund home purchases worth £68.51 billion.
Interestingly, it would seem that all age demographics are becoming dependent on their relatives for handouts when making financial commitments like home ownership. Over a fifth (22%) of people aged between 45 and 54 years old have asked their ageing relatives for help .
Worryingly, parents are having to stretch themselves beyond their means to help their offspring. As a result, over a quarter (26%) of this lending group are not confident they have enough to live on in their retirement.
It is safe to say the need for family help will continue to grow regardless of Brexit and it’s repercussions, with property so much more unaffordable compared to a generation ago.If you are moving home and need help, please contact our highly respected conveyancing team, in Lichfield who will assist in making a stressful time as smooth as possible.