A new report from FTSE100 financial services group Legal & General and Cebr shows that, amidst a reduction in transaction volumes across the UK housing market, it has been highlighted that the Bank of Mum and Dad (BoMaD) will fund nearly 20% fewer property purchases than in 2018. The jump in BoMaD loan sizes has increased total lending for the Bank of Mum and Dad by 10% this year – up to £6.3bn from £5.7bn in 2018. As a result, BoMaD is now the 11th largest mortgage lender in the UK.
Despite the reduction in transaction volumes, BoMaD will still continue to support thousands of buyers across the country in 2019 – involved in more than a quarter of a million (259,400) property purchases. This is down from 316,600 transactions last year, but it still amounts to nearly one in five (19%) transactions in the UK mortgage market. In total, BoMaD will help buyers to purchase property worth nearly £70bn this year. In some parts of the UK, there has been an even bigger rise in contributions from family or friends. In the North West, the average BoMaD ‘loan’ has nearly doubled from £12,900 to more than £24,000, while the South West saw the average contribution rise by over £10,000 to £29,700.
Nigel Wilson, Group Chief Executive at Legal & General said “The Bank of Mum and Dad continues to be the ‘iceberg’ mortgage lender beneath the surface of our housing market – all but invisible yet exerting a massive influence. This year, parents or grandparents, family or friends are set to lend thousands more to fund nearly one in five house purchases.”
“The Bank of Mum and Dad is a symptom of Britain’s broken housing market and it goes far beyond millennials relying on their parents as more older borrowers look to family and friends for financial support.”