Bank of Mum and Dad ‘now a top ten lender’

Property for saleThe ‘Bank of Mum and Dad’ will this year lend more than £5 billion to help their children get on the housing ladder, providing deposits for 300,000 mortgages on homes worth £77 billion.

It means parents are now ranked as the equivalent of a top 10 mortgage lender and will be involved in 25% of all property transactions that take place in the UK market this year.

The findings are containe in a report by Legal & General and Cebr, the economics consultancy and reveal the extent of the problem young people face in buying their first home.

Nigel Wilson, chief executive of Legal & General, said: “The Bank of Mum and Dad plays an increasingly vital role in helping young people take their early steps on the housing ladder.

“But the generosity being displayed by UK families doesn’t make up for intergenerational unfairness – younger people today don’t have the advantages the baby-boomers had, including cheap housing that delivered windfall gains.

“People will always want to help family members – it is a natural thing to do. Relying so heavily on the Bank of Mum and Dad however risks increasing inequality as many young people today are not lucky enough to be able to access parental support when buying a home, or can’t afford to buy even with parental help.

“We have a supply-side problem in housing – we are simply not building enough houses. We need to build more, especially as the Bank of Mum and Dad could soon start to experience a funding crisis of its own.”

Key findings 

  • In 2016, family and friends will help 300,000 of their loved ones to buy a home
  • The Bank of Mum and Dad will help to finance 25% of all UK mortgage transactions in 2016
  • The Bank of Mum and Dad’s average financial contribution is £17,500 or 7% of the average purchase price;
  • Over three quarters of “BoMaD” purchases – 256,400 of them – will be assisted by the buyer’s parents – with a further 22,500 and 27,000 supported by grandparents and other family members/friends respectively;
  • 57% of Bank of Mum and Dad contributions are gifts, 18% are loans with no interest and 5% are loans with interest;
  • £5bn of mortgages will be supported by BoMaD in 2016, making the Bank of Mum and Dad a top 10 lender

Is the Bank of Mum and Dad facing a future funding crisis?

The BoMaD will not run into a nation-wide ‘funding crisis’ for another generation (in 2035), though the regions with the highest and fastest growing house prices will face this problem much sooner.

London is already at the tipping point when it comes to the BoMaD funding. In 2016 London homeowners that received some financial assistance from family and friends, got an average of 6.2% of their home’s total purchase price from the Bank of Mum and Dad.

This represents 51% of the average BoMaD household net wealth in London (excluding property assets). In the South East, the average family contribution towards a loved one’s home purchase will cross the 50% mark in 2025 while for the East of England this will happen in 2028.

This situation is even worse for those families that live in a region with lower household wealth, but whose children are looking to buy a property in one of the more expensive regions. In 2016, those families that live outside of London, but whose children or grandchildren do live in the capital will dedicate an average of 64.1% of their household net wealth to helping them onto or up the property ladder.

Mr Wilson concludes: “If we are ever to end or reduce our reliance on the Bank of Mum and Dad (and Government initiatives such as Help to Buy 2) we need a new innovative approach to housing.

“Helping first-time buyers is necessary – but not the whole solution. We need to modernise housebuilding and make it more efficient so that we can increase supply and quality for all forms of tenure, and all income and age groups, from students to pensioners.

“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.”

Largest mortgage lenders by gross lending (CML, 2014)

Rank 2014 Rank 2013 Name of group 2014 £bn 2014 Estimated
market share
2013 £bn 2013 Estimated
market share
1 (1) Lloyds Banking Group 40.3 19.8% 35.5 20.0%
2 (3) Santander 27.5 13.5% 18.3 10.3%
3 (2) Nationwide Building Society 26.9 13.2% 26.9 15.1%
4 (4) Barclays 20.3 10.0% 16.9 9.5%
5 (6) The Royal Bank of Scotland 19.7 9.7% 14.3 8.0%
6 (5) HSBC Bank 12.6 6.2% 14.5 8.2%
7 (7) Yorkshire Building Society 7.6 3.7% 6.8 3.8%
8 (8) Coventry Building Society 7.4 3.6% 5.9 3.3%
9 (9) Virgin Money 5.8 2.9% 5.6 3.2%
10 (10) Clydesdale Bank 5.0 2.5% 3.1 1.7%


Region Estimated value of BoMaD lending in 2016
North East £103,256,862.91
North West £307,112,911.91
Yorkshire and the Humber £384,228,570.11
East Midlands £494,100,176.34
West Midlands £318,442,285.27
East of England £840,490,568.04
London £574,164,126.19
South East £444,249,891.34
South West £535,794,980.37
Wales £966,713,813.88
Scotland £300,560,793.31
TOTAL: £5.26bn


Region Value of purchased homes (£bn)
North East 1.6
North West 3.6
Yorkshire and the Humber 3.8
East Midlands 5.4
West Midlands 14.3
East of England 14.1
London 8.4
South East 6.2
South West 6.4
Wales 8.7
Scotland 3.6
TOTAL: £76.1bn


Region Number of supported transactions
North East 10,218
North West 22,022
Yorkshire and the Humber 21,393
East Midlands 31,044
West Midlands 39,388
East of England 47,256
London 26,652
South East 22,572
South West 28,152
Wales 32,987
Scotland 18,642
TOTAL: 300,326

NB: The regional figures may not add up to the UK total in some instances because the survey conducted as a part of the research did not cover Northern Ireland. Therefore, figures for Northern Ireland are not presented. In order to calculate the UK level figures the data for the rest of the country was proportionally scaled up to account for the difference in geographical coverage.

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