The Bank of Mum and Dad is giving less money to their children to buy houses

With sky-high rents eating into millennial’s coffers, it’s no surprise that more than ever are forced to turn to the ‘Bank of Mum and Dad’ to buy a house.

More than a quarter of young buyers have received help from family and friends, according to figures released by insurer Legal and General and economics consultancy Cebr.

27% of UK first-time buyers are borrowing from the Bank of Mum and Dad in 2018, up from 25% in 2017, our latest research shows https://t.co/zuKv3uExC2pic.twitter.com/ysm8iuCyX3

— Legal & General (@landg_uk) May 29, 2018

These figures mean, according to Legal & General, that parents and close relatives are virtually acting as the equivalent of a £5.7bn mortgage lender. But that figure is now dropping, with the average contribution slipping from £21,600 in 2017 to £18,000 this year.

Still, the Bank of Mum and Dad is still contributing nationally to 108,800 out of 316,600 total property purchases, with 43 per cent of buyers aged 35 to 44 getting a helping hand while 26 per cent of those aged 45 to 54 are also relying on parents. The latter group may well be at the peak of their earnings and have children of their own – their financial woes represent the struggles of getting on the property ladder with the average age of first-time buyers reaching the thirties in some areas.

The need to prop up struggling offspring is also having a detrimental impact on parents, with 10 per cent of the Bank of Mum and Dad admitting that their generosity left them feeling less secure financially. And 17 per cent were forced to cut back as a result of their outlay, whether that be forgoing holidays, a car or other luxuries, according to Legal & General.

The organisation insists that the trend is “neither desirable nor sustainable” and is clear on the solution to the problem – building more affordable homes. The UK government has pledged to do just that, announcing that it would build 300,000 homes a year by the mid-2020s.

“The Bank of Mum and Dad remains a prime mover in the UK housing market, and will lend the best part of £6 billion to buyers this year, with over 315,000 transactions being underpinned by parental help,” said Legal & General chief executive Nigel Wilson.

“However, it’s clear that households are feeling the pinch, as (Bank of Mum and Dad) contributions have reduced by an average of 17 per cent from nearly £22,000 to a still very generous £18,000.”