Aldermore's first time buyer index reveals the lengths parents are going to help their children get on the housing ladder

POSTED: 6th March 2019
IN: Newsroom
  • A quarter (23%) of prospective first time buyers plan on using the ‘Bank of Mum and Dad’ to help fund their deposit
  • Of those planning on using the ‘Bank of Mum and Dad’, the majority (54%) will use their parents’ cash savings
  • A quarter (24%) will receive equity released from their parents’ property to help fund their deposit for a first home
  • One in five (19%) say their parents will move house, downsizing in order to support their child

With a quarter (23%) of prospective first time buyers planning on using the ‘Bank of Mum and Dad’ to fund their deposit, the latest First Time Buyer Index1 from specialist bank, Aldermore, has revealed the lengths parents are going to help their children get on the housing ladder.

For those planning on receiving support, the following are the ways parents will be assisting to fund their child’s deposit:

How will your parents/family assist you to fund your deposit?

% of prospective first time buyers

They will use their cash savings

54%

They will release equity in their property

24%

They will move and downsize

19%

They will remortgage their property

17%

They will take a cash lump sum from their pensions

6%

They will sell their second property

4%


The latest Index also found that for one in four (26%) first time buyers, raising a deposit remains the biggest obstacle, as well as difficulties finding an affordable property (25%). Therefore, it is no surprise that more prospective first time buyers than ever are turning to their family in order to support their dream2.

Aside from looking for financial support from their family, more than one in five (23%) aspiring first time buyers are currently living with their parents in order to help save for a deposit, and this amount has not changed in two years. In 2017, prospective first time buyers living at home were costing their parents an average of £4,996 a year for food and drink, petrol and utility bills3.

Commenting on the findings, Damian Thompson, Director of Mortgages, Aldermore said: “Young people have had a stark fall in home ownership the past two decades, and with a challenging environment of high house prices, shortage of suitable homes, and weak wage growth this trend will likely not change any time soon. A typical new buyer now needs 18 years to save for a deposit, a striking rise from three years in the mid-90s4, meaning the need for the Bank of Mum and Dad to provide support has increasingly become a necessity, rather than just a helping hand.

“Dipping into cash savings has become common for parents to help their children, but almost half are looking at more substantial measures. For those looking to free up housing wealth, seeking financial advice on what options best suit individual circumstances is crucial. There has been an expansion in product offerings in recent years that provide alternatives to moving house and downsizing.” 

ENDS

The figures are sourced from a nationally representative survey conducted by Opinium Research between 5-14 November 2018 with a sample of 1,501 prospective first time buyers and 502 actual first time buyers. The sample was restricted to GB adults who were students or in work.

According to Legal & General’s Bank of Mum and Dad report released on 28 May 2018.

3 Research conducted by Opinium Research between 18 to 24 May 2017 amongst 1,502 potential FTBs and between 19th and 20th June 2017 amongst 153 parents with children who are potential FTBs (i.e. over 18, living at home but who plan to buy a property within the next 10 years).

4 Findings from the Resolution Foundation event “Lender of last resort? The Bank of Mum and Dad and Britain’s millennial housing crisis” on 4 December 2018.

Notes to editors

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Gareth Hill, Aldermore
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Email:             gareth.hill@aldermore.co.uk  

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