Parental support for first-time buyers peaks
Parental contributions to help younger generations fund their first home purchase (collectively known as ‘the Bank of Mum and Dad’ or ‘BoMaD’) reached nearly £10bn in 2021. According to projections8 , BoMaD supported just under half (49%) of all first-time buyer property purchases last year, with contributions peaking at a massive £9.8bn and averaging just over £58,000 per transaction. This compares with an estimated £6.1bn contributed in 2020 and £5bn handed over in 2019.
A decade of BoMaD
This dramatic increase in contributions should be considered against the backdrop of soaring house prices, manic property market activity and a dramatic dip in first-time buyer affordability that characterised 2021. Even so, parental subsidisation of house purchases has long been a feature of the UK property market, with BoMaD contributing £53.9bn to young house buyers over the past 10 years. Since the 2008 financial crisis and the tightening of mortgage lending criteria in 2014, mortgage credit has become much less affordable – especially for ‘riskier’ first-time buyers – forcing parents to step into the breach.
Think about your own affordability
If you are looking to assist your child in their house purchase, it’s important to think about how this will impact on your own financial stability. We can advise you on what you can afford to contribute whilst maintaining your own financial resilience for the future.
8 Savills, 2021