First-time buyers will borrow a record £10billion from the Bank of Mum and Dad to get on property ladder this year
- Children will borrow billions for house deposits from their parents
- It comes as rising prices mean challenges for young adults to get on the property ladder
- House prices are now 13 per cent higher than before the pandemic
- It is predicted that 12.5 per cent of money lent to first-time buyers in 2021 will be from parents
First-time buyers will borrow a record £10 billion from the Bank of Mum and Dad this year to get on the property ladder.
The new high illustrates the challenge of raising a deposit for young adults amid rising house prices.
And now on average, parents will give their children £58,000 towards their house deposit, according to the Times.
It is expected that 169,000 first-time buyers will resort to the Bank of Mum and Dad this year to boost their deposits.
According to the estate agent Savills, this number amounts to half of all first-time buyers.
First-time buyers will borrow a record £10 billion from the Bank of Mum and Dad this year to get on the property ladder (stock image)
Prices are now 13 per cent higher than before the pandemic and in August, the average house price went up by almost £5,000.
Despite the end of the stamp duty holiday, the average house price in the UK was £248,857 in August- 11 per cent higher than August 2020.
Last year’s property ladder lending record from parents was £6.1 billion but a new high will be reached as children are expected to get a total of £9.8 billion this year.
The numbers of parents lending their children money are now larger than lots of high-street lenders.
The graph above shows the dramatic percentage change in house prices from March 2020 to August 2021
Savills predicts that 12.5 per cent of the money lent to first-time buyers in 2021 will be from parents.
But in 2022 the level of assistance from parents will decline again because of a slower rate of house buying and banks lending at higher loan-to-values again.
Frances Clacy, who is a residential research analyst at Savills, predicts that parents will be offering and relied on for financial support for years to come.
Ms Clacy said: “Slowly rising interest rates will act as a brake on affordability, while rising costs of living, increased national insurance and the prospect of a lower threshold for student loan repayments will make saving for a deposit all the more challenging.’
Savills predicts that 12.5 per cent of the money lent to first-time buyers in 2021 will be from parents (stock image)
She added that family support will remain an important funding source for youngsters to get on the property ladder, especially in an environment existing after Help to Buy.
Savills has crunched the data from the last ten years and estimated that parents have handed out £53.9 billion to help their children get on the property ladder.
The amount has gradually skyrocketed over the years but the figure was still high in 2006.
Records from that year show that there were still a third of first-time buyers supported with their house deposit by their parents and they were given close to £3 billion by them in total.