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Mortgage lending from parents up 30%

Bank of mum and dad now ninth largest homes lender

Property for saleParents have become the ninth biggest mortgage lender with expectations that they will provide their children with more than £6.5 billion this year to help them get on the property ladder.

The latest figure from Legal & General and research group Cebr  is 30% higher than the £5bn loaned a year ago.

It means the so-called bank of mum and dad will be involved in more than 25% of property transactions worth about £75bn, including deposits for more than 298,000 mortgages.

Parents will therefore be providing a sum equal to the amount lent by Britain’s ninth-biggest mortgage lender, Yorkshire Building Society.

The average provided by parents will rise from an average of £17,000 in 2016 to £21,600 this year, with 79% of the funding going to those under 30, or so-called millennials.

The data will fuel more concern that the housing market is over-heating, failing to provide enough homes, and is excluding first time buyers

Nigel Wilson, the chief executive of L&G said the growth of parental funding “is not a good thing, nor is it sustainable or equitable”.

He added: “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.”

 

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