Bank of mum and dad equivalent to £5.7 billion mortgage lender

Bank of mum and dad equivalent to £5.7 billion mortgage lender

According to new data from the trade association UK Finance, mortgage lending in April increased by 11%, compared with last year. In monetary terms this represents approximately £20.4 billion worth of lending which is a 13% rise on the same month last year. Conversely, household savings have grown by only 1.4% over the same period.

Remortgaging has been a major contributor to this increase with expectations of a rise in mortgage rates later this year driving many people to seek out new mortgages while lending is still cheap and there are deals to be had.

Meanwhile, new research from Legal and General has revealed that the ‘bank of mum and dad’ is still playing a significant role in younger people getting on to the property ladder. In 2018 it is estimated that around 27% of buyers will get financial help from friends and family to purchase a property. This is up from 25% last year and will account for 316,600 property transactions worth approximately £81.7 billion.

Property transactions funded by parents are expected to increase by 3% this year with London topping the table where nearly half of all buyers receiving help from their parents. Putting a figure on it, this makes the ‘bank of mum and dad’ the equivalent of a £5.7 billion mortgage lender.