Parental Financial Assistance for Home Purchases Totals £38.5 Billion Over Four Years
Pouring Money into the Property Market: The Modern Role of the 'Bank of Mum and Dad'
The 'Bank of Mum and Dad' has shelled out a staggering £38.5 billion over the last four years to help kids snag houses, recent figures reveal [🔗1]. 👵🏻👴🏻 Handouts and loans from this unconventional bank totaled £9.6 billion in 2024, according to Savills, marking an increase from 2023 and 2022, although it fell short of the 2021 record, set during the pandemic house price surge [🔗2].
In 2024, 173,500 first-time buyers tasted the family-funded magic, bagging an average of £55,572 each. Despite a lower proportion of assistance relative to 2023, this figure still outdid every year since 2012.
Lucian Cook, head of residential research at Savills, attributes this escalating trend to a stricter mortgage market and high interest rates [🔗3]. "First-time buyers face the continuing impact of higher mortgage rates and stringent lending criteria," he elucidates, "Consequently, a larger chunk have required parental support to secure that coveted property deal."
Last month alone, approximately 30,788 parents dish out gifted house deposits worth £100,000 or more [🔗4]. That's a noteworthy 29% of all those helped with family-funded deposits last year!
Interestingly, the first half of 2025 saw unusually high first-time buyer activity as buyers scrambled to beat the changes in the stamp duty thresholds at the end of March [🔗5]. Although we can anticipate a downturn in activity levels over the next few months, Cook suggests those currently overpaying on rent might not want to wait for lower rates to make their move.
Mortgage rates have been on a steady downturn lately, with the British Banking Association predicting that the Bank of England will cut interest rates three to four times in 2025 [🔗6]. Moreover, most lenders have trimmed rates recently, boasting the lowest rates now below the 4% threshold.
Looking ahead, Cook foresees a potential decrease in parental support, which could wane as mortgage rates drop and lenders ease their affordability regulations, thereby enabling buyers to borrow more [🔗7]. HSBC and Lloyds Banking Group have already tweaked their mortgage calculations this year, opening the door for higher mortgage amounts for many customers.
Analysts like Cook assert that the relaxation of mortgage stress tests will boost borrowing by lowering the entry barrier for first-time buyers and allowing them to secure larger mortgages. Consequently, while parental support may remain essential, it's likely to come with a lower average per-buyer price tag.
Regional disparities in first-time buyer assistance emerge when examining cities like London, where high incomes contrary부
- In the realm of personal-finance and business, the relaxation of mortgage stress tests could boost borrowing, lowering the entry barrier for first-time buyers and allowing them to secure larger mortgages.
- The puzzle of Clare's personal-finance situation becomes more complex as she grapples with the rising need for mortgages, even as banking institutions announce plans to cut interest rates in the upcoming year.
- During the pandemic, the 'Bank of Mum and Dad' saw a significant increase in mortgages and loans, reflecting the dire straits many young adults faced in the property-mortgage market.
- Despite the pandemic causing a surge in demand for mortgages, some financial analysts question the long-term sustainability of relying on family for housing support, given the uncertain economic conditions.
- In the world of banking and mortgage lending, over the next few months we may witness a decline in first-time buyer activity as borrowers wait for interest rates to fall further, potentially reducing their need for help from the 'Bank of Mum and Dad'.
