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The way deposits are funded sees major rise in support from the Bank of Mum and Dad

The way deposits are funded sees major rise in support from the Bank of Mum and Dad

For many, this may be the only way of getting onto the housing ladder. According to the English Housing Survey, 34.4% of first-time buyers get a family gift or loan towards their deposit. The reason this may be more common now is because the older generations tend to have much more property wealth due to a strongly performing housing market and rising prices.

Renting, homeownership and COVID-19: Savills looks at what’s changed

A new report released by Savills explores some interesting trends in the UK housing market. It also reveals the latest predictions across renting and buying.

Over the first 15 years of the 2000s, the number of private rented households in England more than doubled. Meanwhile, mortgaged homeowner numbers dropped by around 1.5 million. Homeownership stopped being a top priority for young people, with affordability as well as an abundance of rental housing both contributing.

For the past five years, the levels have remained largely the same; homeowners and private rented tenants are closer in number than ever. The Savills report, titled Changing drivers of tenure, looks at the reasons behind this plateau, and what factors may influence future market shifts.

More help for homeowners
In September 2019, there were around 8.43 million mortgaged homeowners in the UK, according to the Labour Force Survey. This is a fall of 1.53 million since 2000, although is a slight rise of 340,000 from 2016.

This is influenced by two major factors: a relatively recent influx of first-time buyers, combined with less people at the other end of the scale paying off their mortgages.

According to UK Finance, there has been more than 350,000 first-time buyers per year over the past few years. Back in 2013, this number was below 260,000.

One thing that has changed is the amount of government help available to buyers now. The Help to Buy scheme had been helping an average 40,000 first-time buyers a year onto the housing ladder in England, for example. Lenders had also been offering higher loan-to-value mortgages.

Bank of Mum and Dad
The report points out that the way deposits are funded now compared to 20 years ago has also changed. There’s been a major rise in support from the “bank of Mum and Dad“, as well as help from grandparents. For many, this may be the only way of getting onto the housing ladder.

Tim K. Dean, Credi Founder | Commentator & Expert on Family Lending, Bank of Mum & Dad and Neo-Credit Scores is available for media interviews and appearances. More…

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