The Bank of Mum and Dad (BoMaD) is gearing up to be a driving force behind the post-lockdown recovery in the UK’s housing market, as parents and grandparents prepare to put their hands in their pockets to help younger family members onto the housing ladder. Despite a fall in such family lending during the pandemic, nearly a quarter of housing transactions will be backed by BoMaD in 2020, according to new research from Legal & General and Cebr.
Although the Bank of Mum and Dad will fund 85,000 fewer home purchases this year, after the housing market effectively shut down during the lockdown period, family members are still expected to fork out £3.5bn. In total, it’s anticipated that such support will be involved in 175,000 housing transactions, with a total estimated value of £50.3bn, as BoMaD steps in after mainstream lenders restricted the low-deposit mortgage options many young people rely on in the wake of the pandemic.
The figures highlight the plight of families being squeezed by high property prices. Parents and grandparents have increasingly been forced to help the next generation buy their first home as the limited supply of housing has pushed up prices beyond the reach of many young people. And while the older generation is determined to be generous, giving away large sums is damaging the retirement hopes of many, while younger people without such support are being forced out of the market altogether.