Bank of mum and dad now funding multiple steps up housing ladder
The ‘Bank of Mum and Dad’ are funding more than just first steps on the housing ladder, with financial gifts pivotal for second steppers too.
Nearly 20 per cent of second-time buyers have received support to buy their property, according to new research from Barclays, rising to 30 per cent for first-time buyers.
This amounts to an average gift size of £81,451 and £76,239, respectively, the data found.
These are also often repeated gifts, as nearly half of owners who had financial help for their second or third homes also report received support for their first property.
Janin Patel, head of mortgages, savings and insurance at Barclays, said the research shows a “market in transition”.
“Though first-time buyers are often thought of as the main beneficiaries of the bank of mum and dad, second-steppers’ reliance on family support underlines the impact of cost-of-living pressures on all sections of the market,” Patel added.
Britain faces a housing affordability crisis
Britain’s housing affordability crisis has been a growing problem for the last two decades, with a huge spike in house prices in the 2000s – without an accompanying rise in wages – creating long-term unaffordability in the market.
The average English home now costs 7.9 times the average salary. If you live in London conditions are far worse: Someone earning an average income faces a whopping affordability ratio of 13.5.
One in six renters said they plan to buy property in the next year, but more than two-thirds of these prospective home buyers said property prices are an obstacle to achieving that goal.
Aneisha Beveridge, head of research at estate agents Hamptons, said: “The bank of mum and dad is no longer just a lifeline for first-time buyers – it’s increasingly supporting second and even third steppers.
“Traditionally, homeowners would borrow more to cover the higher purchase price and stamp duty bill, but with mortgage rates still elevated, stretching affordability has become far harder and more costly.
“As long as rates remain above the ultra-low levels of the past decade, family assistance looks set to become a more permanent fixture of the housing market.”