The so-called ‘Bank of Mum and Dad’ are now as crucial as one of the UK’s top 10 lenders – and will finance 25 per cent of all mortgages in in 2016.
That is according to research from Legal & General and financial services group Cebr.
Their research has indicated that parents will lend over £5 billion this year, providing deposits for over 300,000 mortgages and purchasing homes worth £77 billion.
The Bank of Mum and Dad’s average financial contribution is £17,500, or seven per cent of the average purchase price of a home.
Nigel Wilson, the CEO of Legal & General has said that parental support is becoming increasingly important to help young people get on the housing ladder.
And he warned : “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.”
The research also showed that three-quarters of family-funded house purchases are done by parents, with family friends and grandparents also making up the difference.