Fifth of ‘second-steppers’ home buyers receive financial help from friends or family

Barclays’ latest Property Insights report reveals that the influence of the ‘Bank of Mum and Dad’ now extends well beyond first-time buyers, playing a pivotal role for ‘second steppers’. For renters, deposits remain a challenge, but they are less deterred by the cost of mortgages. Meanwhile, consumer confidence showed modest signs of recovery following the Autumn Budget, as prospective buyers resume plans they had put on hold.

Financial assistance from family and friends remains a driving force behind UK homeownership, with nearly one in five owners (19 per cent) saying they received support to buy their current property. This rises to 30 per cent among first-time owners and 20 per cent for second-timers, who received on average £76,239 and £81,451 respectively. These are also often repeated gifts, as nearly half (49 per cent) of owners who had financial help for their second or third homes also report receiving support for their first property.

Amongst those who received financial help, the most common forms of support were lump sum gifts from parents (39 per cent), inheritance (27 per cent), and loans from family or friends (13 per cent).  Renters also report the necessity of familial support as half (52 per cent) say they would find it impossible to buy a home without an inheritance or loan from a family member.

Nearly one in six renters (16 per cent) say they plan to buy property in the next year, yet two thirds (66 per cent) of these prospective buyers say property prices are an obstacle to achieving that goal. Six in 10 (59 per cent) also cite struggling with ‘moving goalposts’, with the savings goal from the outset increasing to keep pace with price growth. Conversely, mortgage costs form less of a hindrance, with 40 per cent of renters saying it currently costs more to rent than it would to pay a mortgage on a similar home. This comes as rent and mortgage spending growth slowed in November, rising 3.5 per cent year-on-year, the lowest increase since January (2.0 per cent).

Despite market sluggishness, consumer confidence in the housing market rose slightly to 26 per cent in November, following an annual low of 24 per cent in October. Post-Budget, most UK adults say their confidence in their ability to buy a home is unimpacted (58 per cent), though just over a quarter (27 per cent) feel their confidence has decreased. Meanwhile, half (50 per cent) of those who intend to move in the next year say they had paused their plans in anticipation of the Budget but are now resuming them following the announcement.

Across the market, nearly one in five (17 per cent) mortgage holders report that they have either already remortgaged this year or expect to do so next year. Six in 10 (62 per cent) of those remortgaging anticipate higher monthly costs. As a result, 35 per cent of homeowners are proactively reviewing their budgets to identify savings, while 36 per cent plan to cut back on discretionary spending such as takeaways and beauty treatments. For their new deals, keeping monthly payments low is the top priority for 45 per cent, while 35 per cent seek the lowest rate available, regardless of lender. However, a three in 10 (30 per cent) would still prefer to remortgage with their current provider rather than switching lenders.

Jatin Patel, Head of Mortgages, Savings and Insurance at Barclays, said “Our latest data highlights 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.

“Even as property prices remain a major challenge for first-time buyers, it is encouraging that improvements to affordability mean more renters are able to access the finance they need to become homeowners.”

Julien Lafargue, Chief Market Strategist at Barclays, said “With the Budget now published, clarity has improved allowing economic actors to start planning ahead. For the property market, this should mean greater level of activity as we move into the New Year.

“That said, affordability remains a challenge which can be overcome through a combination of lower interest rates, greater housing availability, and financing innovation.”