'˜Bank of mum and dad' lends Â£5billion a year to help children buy homes
Children in the UK will borrow a total of Â£5billion from their parents to get them on the property ladder in 2016, according to data from Legal & General (L&G).
The financial services company says the so-called “Bank of Mum and Dad” will help finance 25% of all UK mortgage transactions this year - at a national average amount of £17,500.
The £5billion in loans and gifts is equivalent to that paid out for mortgages by Clydesdale Bank in 2014, the UK’s tenth largest mortgage lender by gross lending.
But L&G warns this method of lending is coming under increasing pressure.
“The Bank of Mum and Dad plays a vital role in helping young people to take their early steps on to the housing ladder,” said Legal and General chief executive Nigel Wilson.
But he said this funding method was reaching “tipping point”, with more than half of average household net wealth, not including property assets, going towards helping children on to the housing ladder.
Mr Wilson added not all young people were able to access parental support, while many who could were still unable to afford a home.
He said: “We need to fix the housing market by revolutionising the supply side - if we build more houses, demand can be met at a sensible level and prices will stabilise relative to wages.”