Bank of Mum and Dad ‘feels the pinch’
Parents are lending less money to their children but are still ‘prime movers’ in UK housing market
Parents are giving their children less financial assistance than they used to as the so-called ‘Bank of Mum and Dad’ begins to feel the economic pinch.
According to Legal & General (L&G), the average parental contribution for first time buyers will be £18,000 this year, down 17% from last year’s £21,000.
In total, overall lending is expected to drop to £5.7bn this year from £6.5bn in 2017.
Despite the smaller sums being loaned, L&G said the Bank of Mum and Dad was still "a prime mover" in the UK housing market, with one in four buyers expected to receive financial help from family or friends.
This figure was even higher among under-35s, with three in five getting assistance, with almost half of all buyers in London (41%) expected to receive help from their parents.
L&G chief executive Nigel Wilson warned that even as older people begin to feel “a bit of pinch” the volume of transactions depending on Bank of Mum and Dad funding continues to grow.
He told the BBC is was not “sustainable or fair” for parents and young people to “remain so co-dependent when it comes to housing purchases”.