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PARENTS ARE THE 10TH BIGGEST MORTGAGE LENDER IN THE UK

Thu 11 Apr 2019

The "Bank of Mum and Dad" is the 10th biggest UK mortgage lender as buyers increasingly rely on financial support from their parents, a report suggests.

 

Parents will lend £6.5bn this year, according to insurer Legal and General, and be involved in 26% of all UK property transactions.

 

This is up from the £5bn of lending estimated in L&G's equivalent survey a year ago.

 

The average first-time buyer requires a deposit of about £26,000, lenders say.

 

Figures from the Council of Mortgage Lenders (CML) show that the average first-time buyer with a mortgage in the UK is 30 years old and borrows an average of £132,100.

 

Price war

The L&G research suggests that parents will provide deposits for more than 298,000 mortgages.

 

Last year, it suggested that parental financial support made the Bank of Mum and Dad the equivalent of the 10th biggest UK mortgage lender, and this ranking has not changed.

 

The proportion of property transactions that they are involved in has also been relatively static from a year earlier - but parents' gifts, loans or inheritance values have risen to an estimated average of £21,600 this year compared with £17,500 a year ago.

 

Some 79% of this parental funding goes to property buyers aged under 30, L&G claims.

 

This is despite a price war between mortgage lenders, which has pushed mortgage rates down to historically low levels. However, lenders typically require a larger deposit than was the case before the financial crisis.