The Bank of Mum and Dad | A Legal & General Special

The Bank of Mum and Dad

New findings from a study by Legal & General and Cebr show that familial financial support, often called the Bank of Mum and Dad, will be crucial in revitalising the UK housing market. Faced with economic challenges from the COVID-19 crisis, nearly a quarter (23%) of housing transactions in 2020 will rely on the Bank of Mum and Dad.

Furthermore, 24% of borrowers increasingly seek financial help from family and friends. This highlights the significant influence and dependence on the Bank of Mum and Dad in the housing sector’s recovery. As buyers deal with the pandemic’s aftermath, support from close circles becomes more crucial. This support will shape the property transaction landscape in the coming year.

Rising Reliance on Family Support

Since the pandemic, 24% of home buyers depend more on the Bank of Mum and Dad. The housing market lockdown in H1 stymied the Bank of Mum and Dad, reducing total lending to £3.5bn. However, the Bank of Mum and Dad will still support £50bn worth of property transactions in 2020. Inheritances are skipping a generation, with a quarter of lenders using legacies to help adult children fund house purchases. A third (33%) of those planning to buy a house in the next five years will use money from family and friends.

Impact of the Lockdown

The Bank of Mum and Dad will lend approximately £3.5 billion to family members this year. This is a significant drop from the £6.3 billion provided by parents, grandparents, and others in 2019. This decline results in 85,000 fewer home purchases. These figures illustrate the housing market’s effective closure during the COVID-19 lockdown, with HMRC reporting nearly halving property transactions in Q2 2020.

The Ongoing Role of the Bank of Mum and Dad

The Bank of Mum and Dad remains a key player in the UK housing market. It is estimated to support 175,000 housing transactions this year, valued at approximately £50.3 billion. Despite current challenges, it is vital to the market’s recovery.

As the housing market reopens, families increasingly rely on this financial support. Many first-time buyers, mainly, are proceeding with their home-buying plans post-lockdown. This demonstrates the Bank of Mum and Dad’s resilience and adaptability during uncertain times.

Moreover, its importance is expected to grow as property prices remain high. This form of intergenerational support helps bridge the gap for those struggling to save deposits. It also highlights families’ commitment to navigating the ever-changing real estate landscape.

The Bank of Mum and Dad helps sustain market activity during challenging periods by aiding buyers. Transitioning out of lockdown, its contributions will be crucial for the housing sector’s stability and growth.

The Bank of Mum and Dad | Leans in 

Legal & General’s study reveals that the COVID-19 pandemic has boosted generosity among ‘Bank of Mum and Dad’ (BoMaD) lenders. Relatives and friends are set to contribute an average of £20,000 towards deposits in 2024. This underscores a stronger commitment to supporting loved ones during uncertain times.

The crisis has driven 15% of BoMaD lenders to increase their contributions beyond pre-pandemic levels. Among those reporting a change in giving habits, 18% plan to provide at least 50% more support than before. This significant rise in financial aid reflects the evolving role of family networks in addressing housing affordability.

This trend highlights how the pandemic has reshaped family financial dynamics in the UK. The willingness to assist with deposits showcases the adaptability of the BoMaD network during economic uncertainty.

Regional Variations in BoMaD Contributions

London homebuyers benefit most, with typical “loans” from the Bank of Mum and Dad (BoMaD) averaging £25,800. Meanwhile, the East Midlands has experienced a sharp rise in BoMaD contributions, increasing significantly from £16,000 in 2019 to £24,100 in 2020. On the other hand, the North East and Yorkshire report the lowest average contributions, with family and friends lending £13,800.

Despite regional differences, the Bank of Mum and Dad plays a crucial role in property purchases across the UK. These contributions highlight the growing reliance on family and friends to support homebuyers in an increasingly challenging property market. London and the East Midlands showcase the largest financial shifts, reflecting unique housing dynamics in these regions.

As the property market evolves, these trends demonstrate how the Bank of Mum and Dad adapts to meet homebuyers’ needs. Regional variations underline families’ diverse approaches to help first-time buyers secure a foothold in the housing market.

Read the full report of The Bank of Mum and Dad.

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