The bank of mum and dad 
New findings from a study conducted by Legal & General and Cebr reveal that familial financial support, commonly called the Bank of Mum and Dad, is poised to be pivotal in revitalising the UK housing market. In the face of economic challenges resulting from the COVID-19 crisis, nearly a quarter (23%) of housing transactions in 2020 are anticipated to be supported by the Bank of Mum and Dad.
Additionally, 24% of borrowers are increasingly turning to the financial assistance of their family and friends. This underscores the significant influence and reliance on The Bank of Mum and Dad as a driving force in the housing sector’s recovery. As buyers grapple with the aftermath of the pandemic, support from close circles becomes even more crucial, shaping the landscape of property transactions in the coming year.
- 24% of home buyers are more reliant on The Bank of Mum and Dad since the pandemic
- Bank of Mum and Dad stymied by housing market lockdown in H1 as total lending falls to £3.5bn.
- However, the Bank of Mum and Dad will still be behind £50bn worth of property transactions in 2020
- Inheritances skip a generation as a quarter of The Bank of Mum and Dad lenders use legacies to help their adult children fund house purchases.
- A third (33%) of those likely to buy a house in the next five years said that this will be done using money from family and friends.
In response to the lockdown’s profound impact on the UK housing market, the Bank of Mum and Dad is set to lend approximately £3.5 billion to family members this year. This marks a significant decline from the £6.3 billion extended by parents, grandparents, and others in 2019, resulting in 85,000 fewer home purchases.
These numbers illustrate the housing market’s effective closure during the COVID-19-induced lockdown, with HMRC reporting a substantial decrease in property transactions, nearly halving in Q2 2020.
Despite these challenges, the Bank of Mum and Dad remains a crucial player, participating in an estimated 175,000 housing transactions valued at around £50.3 billion this year. As the housing market reopens, The Bank of Mum and Dad is poised to play a vital role in the sector’s recovery, supporting thousands of buyers who are proceeding with their home purchase plans post-lockdown.
The resilience of the Bank of Mum and Dad reflects its ongoing commitment to assisting families in navigating the ever-changing landscape of the real estate market.
The Bank of Mum and Dad | Leans in
Legal & General’s latest study reveals that the ongoing COVID-19 pandemic has spurred increased generosity among the Bank of Mum and Dad lenders. In the current year, relatives and friends are anticipated to contribute an average of £20,000 towards deposits, showcasing a heightened willingness to support loved ones during these challenging times.
The crisis has prompted 15% of BoMaD lenders to exceed their typical giving, surpassing pre-pandemic levels. Notably, 18% of those acknowledging a change in their giving behaviour due to the pandemic express a desire to provide at least 50% more financial assistance than they would have before the global health crisis unfolded.
This surge in generosity underscores the profound impact of the coronavirus on familial financial dynamics as individuals within the BoMaD network adjust their support levels to navigate the uncertainties brought about by the pandemic.
London-based homebuyers are poised to benefit the most, as the typical Bank of Mom and Dad (BoMaD) “loan” averages £25,800. The East Midlands has also witnessed a noteworthy increase in BoMaD contributions, rising from £16,000 in 2019 to £24,100 in 2020. In contrast, the North East and Yorkshire see the lowest average contributions, yet family and friends in these regions still lend a substantial £13,800 on average to support their loved ones in purchasing a home.
Additionally, this trend reflects the growing reliance on familial and friendly assistance in the property market. London and the East Midlands are experiencing the most pronounced shifts in financial support for homebuyers. As housing dynamics continue to evolve, these regional variations highlight the diverse ways in which the Bank of Mom and Dad plays a crucial role in facilitating property acquisitions.
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