BoMaD is set to lend nearly £6bn this year alone
The Bank of Mum and Dad (BoMaD) will be the equivalent of a £5.7bn mortgage lender in 2018, according to new research and forecasts from FTSE100 financial services group Legal & General and Cebr. ‘BoMaD’ remains a major force in the UK housing market in 2018. 27% of buyers will receive help from friends or family, up from 25% in 2017. This year, the Bank of Mum and Dad will help 316,600 loved ones buy a home – up from 298,300 in 2017.
The value of Bank of Mum and Dad-supported property purchases in 2018 will rise to £81.7 billion, representing a £4.2 billion or 5% increase since 2016.
However, parents are providing smaller sums – the average BoMaD contribution will decline from £21,600 in 2017 to £18,000 in 2018. Total lending has reduced from its height at £6.5bn in 2017 to £5.7bn in 2018. This is, however, still an overall increase against £5bn of lending in 2016.
Nigel Wilson, Group Chief Executive at Legal & General, said:
“The Bank of Mum and Dad remains a prime mover in the UK housing market, and will lend the best part of £6bn to buyers this year, with over 315,000 transactions being underpinned by parental help.
“However, it’s clear that households are feeling the pinch, as BoMaD contributions have reduced by an average of 17% from nearly £22,000 to a still very generous £18,000.
“The fact that in 2018, 1 in 4 housing transactions in the UK will be dependent on the Bank of Mum and Dad, while hard-pressed parents are finding it more difficult to provide the funds to help their family with deposits, will further exacerbate the UK’s housing crisis.
“We need more homes for the young, old and families alike. Legal & General is playing its part by announcing an initiative to deliver thousands of new affordable homes.”