Parents go to greater lengths to assist their children get on the housing ladder as Covid-19 forces the bank of mum and dad to 'become a necessity'

POSTED: 28th April 2021
IN: Newsroom
  • Prospective first time buyers getting help from family to fund a deposit jumps from less than a quarter (22%) in March 2020 to a third (33%) in March 2021
  • Those getting assistance from inheritance increased to over a quarter (27%), from only 6% a year ago in March 2020
  • The Bank of Mum and Dad has expanded to the Bank of the Extended Family with an increasing number of grandparents, siblings and wider family members helping out
  • Almost half (45%) of those getting family assistance are receiving it from grandparents
  • Parents are now going to much greater lengths to assist children with nearly two in five (38%) remortgaging their property, 38% selling an expensive asset e.g. a car, holiday home etc, and over a third (36%) releasing equity in their property

New First Time Buyer Index research from Aldermore bank1, surveying over 1,000 prospective first time buyers in the UK, shows the great lengths that parents are going to help their children get on the housing ladder, as Covid-19 increases challenges.

Help is at hand

With the Covid-19 pandemic bringing greater barriers, with recent research showing the average deposit for a first time buyer in the UK jumped nearly £12,000 in the past twelve months to £59,0002, prospective first time buyers are increasingly turning to their family and friends for assistance. One third (33%) say they are funding their deposit with parental/family assistance, an increase from under a quarter (22%) in March 20203 just before the pandemic hit. In addition, over a quarter (27%) are using their inheritance, a big jump from one in twenty (6%) pre-Covid-19. 

 

How are first time buyers funding their deposit

March 2021

March 2020

Using my own savings

66%

66%

Using joint savings with my partner

45%

43%

With parental/ family assistance

33%

22%

From inheritance

27%

6%

Borrow from/ buying with friends

24%

4%

 

Parents going the extra mile to help their children

The methods in which parents provide funding for their children’s deposit is changing, with the traditional means of providing cash savings decreasing from 55% in March 2020 to 35% now, as parents go to more extreme lengths to help their children.

Nearly two in five parents (38%) that are helping their children, are doing so by remortgaging their property, up dramatically from 7% pre-Covid-19. Two in five parents (38%) are also selling significant assets, such as a car or holiday home or releasing equity in their homes to drum up funds, a huge increase from March 2020 where just 9% of parents went to these lengths. Other popular support for first time buyers include downsizing (18%), selling a second/buy to let property (18%), taking money from pensions (17%) or stocks/ shares (16%).

 

How are parents assisting their children

March 2021

March 2020

Remortgaging their property

38%

7%

Sold an asset, i.e. a car, holiday home, etc.

38%

9%

Released equity in their property

36%

9%

They had cash savings

35%

55%

They moved and downsized

18%

13%

Sold a second property/ investment property

18%

10%

Took a cash lump sum from their pension

17%

10%

Stocks and shares

16%

11%

Liquidised investments

16%

10%

Sold a business

11%

8%

 

Bank of Mum and Dad now the Bank of the Extended Family and Friends

The Bank of Mum and Dad continue to be the main source of support, providing funds for nine in ten (93%) prospective first time buyers receiving assistance, up from 62% in March 2020. However, more members of the family are helping with the Bank of Grandma and Granddad growing from one in nine (13%) pre-Covid-19 to almost half (45%) of prospective first time buyers receiving assistance.

There is also a sudden trend of prospective first time buyers seeking to buy or receive funds from outside the family, turning to friends for support or to buy together. A sixth (15%) are asking to in part fund their deposit this way, compared to just 11% twelve months ago.

Who in the family is assisting financially

March 2021

March 2020

Parents (combined)

93%

62%

Father

81%

66%

Mother

77%

57%

Grandparents (combined)

45%

13%

Grandmother

38%

15%

Grandfather

24%

10%

Friend

15%

11%

Uncle and/or Aunt

13%

12%

Siblings

10%

21%

 

Jon Cooper, head of mortgage distribution, Aldermore said:

“Young people have had a stark fall in home ownership the past two decades, as the challenging environment of high house prices, shortage of suitable homes, and weak wage growth have hindered home buying chances. The Covid-19 pandemic has only increased the difficulties faced by new buyers meaning the Bank of Mum and Dad providing support has increasingly become a necessity, rather than just a helping hand.

“This generation of first time buyer is more diverse in financial circumstances than ever before, but there are also more pathways to home ownership than a decade ago. It may feel daunting and confusing at times so we would recommend seeking advice from a mortgage broker that can give a whole of market view of both high street and specialist lenders so new buyers get the options that suit their individual circumstances.”

**Ends**

Notes to editors

1 Research conducted, on behalf of Aldermore bank, by Opinium in March 2021, with a nationally representative sample size of 1,008 prospective first time buyers

2 Research from Halifax bank. Source

3 Research conducted, on behalf of Aldermore bank, by Opinium in March 2020, with a national representative sample of 2,003 prospective first time buyers

 

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