Bank of Mum and Dad Funds Over a Third of First-Time Buyers
The Social Mobility Commission has confirmed what many people may already have thought to be true – first-time buyers regularly resort to the Bank of Mum and Dad to fund their deposit to help them get onto the housing ladder.
The commission, acting as an advisory body to the Government, has revealed an increasing number of people are looking to their parents when trying to buy their first property. Figures for 2013-14 have confirmed around a third (34%) of first-time buyers have received financial help from their parents to help them. This
contrasts sharply with a figure of 20% recorded seven years previously, according to research by the commission.
Levels projected to rise further in the coming years
Not only has the percentage increased in the past seven years, it looks set to continue for the foreseeable future, too. The commission estimates around 40% of first-time buyers will be asking their parents for help in a couple of years from now.
How accurate are the figures?
Darren Pescod from The Mortgage Broker Ltd said “The figures used by the Social Mobility Commission stem from cases where people have declared they are part-financing their purchase with the help of their parents. Some of those helped by family money don’t declare it. This means the actual figure could be higher still”
There is another element to consider, too. Research performed by Anglia Ruskin University and the Cambridge University reveals an additional 9.6% of first-time buyers use inherited cash to help fund their home purchase.
It is harder than ever to get onto the housing ladder
The Mortgage Broker Ltd states that many people would correctly assume it has become more difficult to get onto the housing ladder. In 1990, 63% of those aged between 25 and 29 already owned their first property. Contrast that with the figure today, which has dropped sharply to just 31%. This means we’ve gone from nearly two-thirds of people in that age group owning a home to under one-third.
Couple this with the fact many young people are seeking help from their parents to fund a purchase today, and we can see just how dire the situation is. If you were to remove the cases where first-time buyers have resorted to family cash to help them buy their property, what would the percentage be then?
Clearly, not everyone can rely on parental cash or an inheritance to help them buy a property. The gap between earnings and property prices has grown in recent years, and this has meant many people have found it increasingly hard to save up for a deposit on a home. Stricter mortgage rules have also made it harder to get a mortgage.
While the figures make for sobering reading, perhaps most depressing is the realisation that nothing will change anytime soon. For those still renting and still looking to get onto the housing ladder, there may be little hope for doing so for the foreseeable future – unless they have access to the Bank of Mum and Dad.