Legal & General, the FTSE100 financial services group and Cebr, the economics consultancy, have today published a new report into the role the Bank of Mum and Dad plays in helping their children get on, or move up the property ladder.
2 May 2017
The research shows the Bank of Mum and Dad will lend over £6.5 billion in 2017, up from £5bn in 2016, providing deposits for over 298,000 mortgages, and helping others to purchase homes worth £75 billion. The Bank of Mum and Dad is now on a par with the 9th largest mortgage lender in the UK (up from no.10 last year) and will be involved in 26% of all property transactions that take place in the UK market this year.
Nigel Wilson, CEO of Legal & General, said:
“The Bank of Mum and Dad continues to grow in importance in helping young people take their early steps onto the housing ladder. The intergenerational inequality that creates the demand for BoMaD funding continues to widen – younger people today don’t have the same opportunities that the baby-boomers had, including affordable housing, defined benefit pensions and free university education. Parents want to help their kids get on in life, and the Bank of Mum and Dad is a testament to their generosity, but it is also a symptom of our broken housing market.
“The UK is experiencing a supply-side crisis in housing – we are simply not building enough houses. We need to build more homes for the young, old and families alike – more quickly and cost effectively. Legal & General is playing our part by building and financing thousands of new homes. As well as providing much needed new properties, it will also deliver economic growth and new jobs.”
Other key findings from Legal & General’s “Bank of Mum and Dad” research include:
Intergenerational unfairness is not the only issue. The Bank of Mum and Dad creates intrafamilial challenges too. Only 40% of parents provide equal financial support to their kids. 18% only help the eldest child buy a property, whereas 16% favoured the younger child. National house price differentials make little difference to the Bank of Mum and Dad’s criteria for extending support - most parents provide a fixed amount of financial help, regardless of where their kids choose to live – only 1 in 5 were prepared to provide more help for kids living in pricier areas. However, 2 in 5 homeowners in London (39%) receive BoMaD help.
Nigel Wilson concludes:
“This is the second year of our Bank of Mum and Dad research programme and the statistics show the problem is getting worse, not better. Transaction volumes are down in the housing market but BoMaD funding is growing exponentially. This is not a good thing, nor is it sustainable or equitable for our parents (the lenders) and young people (the borrowers). We need real action to fix the housing market and restore affordability for all. Institutions like Legal & General can regenerate not just residential housing, but the towns and cities in which the homes are built. Infrastructure, jobs and local economic growth are all key to creating thriving communities where people want to live.”
- ENDS -
Table 1: Largest mortgage lenders by gross lending (CML, 2015)
|Rank 2015||Rank 2014||Name of group||2015 £bn||2015 market share||2014 £bn||2014 market share|
|1 Table 2: Average BoMaD contribution in 2017 by UK region*|
|1||(1)||Lloyds Banking Group||38.4||17.5%||39.6||19.5%|
|2||(2)||Nationwide Building Society||30.5||13.9%||27.1||13.3%|
|4||(5)||The Royal Bank of Scotland||24.7||11.2%||19.7||9.7%|
|7||(7)||Coventry Building Society||8.0||3.6%||7.4||3.6%|
|9||(7)||Yorkshire Building Society||6.6||3.0%||7.4||3.6%|
|Region||Estimated value of the average BoMaD contribution in 2017|
|*Excludes those that did not receive any financial assistance from family and friends|
|Yorkshire and the Humber||£15,800|
|East of England||£24,300|
Established in 1836, Legal & General is one of the UK's leading financial services groups and a major global investor, with over £1.2 trillion in total assets under management* of which a third is international. We also provide powerful asset origination capabilities. Together, these underpin our leading retirement and protection solutions: we are a leading international player in pension risk transfer, in UK and US life insurance, and in UK workplace pensions and retirement income. Through inclusive capitalism, we aim to build a better society by investing in long-term assets that benefit everyone.
*at 31 Dec 2022