The concept of the “Bank of Mum and Dad” has taken on significant relevance in the British housing market, particularly among first-time buyers seeking to overcome the hurdles of homeownership. Recent statistics released by the estate agency Savills indicate that over half of first-time buyers in the past year received financial assistance from family members, primarily their parents. This financial backing, often in the form of loans or gifts, averaged a remarkable £55,572 per recipient, underscoring the extent to which family support is influencing purchasing decisions.
Amidst fluctuating economic conditions, young buyers have been contending with relatively high mortgage rates in 2024, coupled with escalating rent costs. As many potential buyers find themselves squeezed financially, the support from family has become increasingly crucial, enabling them to afford entry into the housing market. The Savills report highlights that in a landscape where first-time buyers are facing daunting financial realities, this familial assistance is a lifeline, often making the difference between renting and owning a home.
The disparity between the previous year and current assistance rates reveals some interesting trends. While 57% of first-time buyers had parental support in the preceding year, this number dipped to 52% in the latest report. However, this level of assistance remains higher than rates observed in the years immediately preceding 2023, suggesting a sustained trend toward familial financial aid. Interestingly, data from Savills demonstrates that family support for first-time buyers peaked during the aftermath of the 2008 financial crisis, when 70% accessed such assistance.
In 2024, it was estimated that around 173,500 first-time buyers benefited from familial financial help, accumulating a staggering total of £9.6 billion in support. These figures are derived from comprehensive analyses of buyer behavior, loan-to-value ratios, and responses to various surveys, painting a broad picture of how family backing shapes home-buying experiences.
The average mortgage rates for two and five-year fixed deals hovered between 5% and 6% last year, with many first-time buyers—especially those unable to present substantial deposits—facing rates significantly higher than those recorded in preceding years. To navigate this challenging mortgage landscape, many buyers sought increased family support to secure a more favorable deal. As Lucian Cook, head of residential research at Savills, articulated, the impact of escalated mortgage rates and stringent lending criteria continues to pose challenges for first-time buyers.
Furthermore, the growing financial pressures stemming from a rising cost of living have exacerbated the housing situation for younger generations. With rent prices skyrocketing—where increases exceeded 9%—many individuals have resorted to living with their parents into their late twenties and thirties. Financial assistance offered varies regionally, affected by factors such as housing prices and average income levels, which remain inconsistent across the country.
Recent changes to the stamp duty regulations have also reshaped the landscape for first-time buyers. As of April, anyone purchasing property for more than £300,000 in England and Northern Ireland is now liable for stamp duty, a reduction from the previous threshold of £425,000. This shift led to a surge of first-time buyers rushing to secure purchases before the updated tax enforcement, prompting a significant spike in applications during the early months of 2024.
Moving forward, industry experts anticipate potential adjustments from regulators concerning lending criteria, which could further ease the obstacles faced by first-time buyers. Lowering the barriers to mortgage qualification is key, as it may allow many to secure larger loans, making homeownership more attainable amidst challenging economic circumstances. Although the prevalence of family support may rise alongside increased first-time buyer activity, it is anticipated that the average financial outlay per buyer will be lower, pointing to a need for careful planning and budgeting among families supporting aspiring homeowners.