House buying funds supplied by the Bank of Mum and Dad has “dropped dramatically” over the last two years, shows government data.
In 2019/20, the English Housing Survey describes 28% of first-time buyers as having received finance from family and friends to help with their purchase.
This is down from 39% in 2018/19.
Hargreaves Lansdown personal finance analyst Sarah Coles says there is reason to believe that this figure will decrease further. She says: “Funding from the Bank of Mum and Dad could dry up even faster now that parents and grandparents have to think more carefully as to whether they can afford to plunder their own finances to help their children onto the property ladder.”
Coles continues: “It means the vast majority of people who buy a home of their own have to do so under their own steam, and with an average deposit of £42,433, that’s an awful lot to ask – especially when those who are privately renting while they save for a place of their own spend almost a third of their income on rent.”
The data shows that mortgage holder spend 18% of their income on their loan, whereas renters spent 32% of their income on keeping a roof over their head.
“Almost half of households have no savings (45%),” adds Coles, “but this is particularly acute among renters. Three in five private renters have no savings at all. This means not only do they have nothing to fall back on in a crisis, but that they aren’t getting any closer to owning a property of their own,” Coles conclude.