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Bank of Mum and Dad rivals major lenders

UK-Houses

The Bank of Mum and Dad is now equivalent to one of the UK’s top 10 mortgage lenders and is set lend over £5bn in 2016, according to Legal & General.

In research with the Centre for Economics and Business Research, L&G estimates parents will be involved in 25 per cent of mortgage transactions taking place in the UK this year, backing the purchase of 300,000 homes worth £77bn.

On average, parents will back their children to the tune of £17,500, or 7 per cent of the average purchase price, with 57 per cent of contributions as gifts.

L&G predicts 18 per cent of contributions will be loans with no interest, while 5 per cent will include interest.

L&G chief executive Nigel Wilson says: “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.”

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. Whilst the Government are starting to turn their attention to the housing market (both supply side and demand side) it still feels highly dysfunctional. Despite this, I still hear both investors and those facilitating property purchases talking about ‘BTL investments being safe as houses’.

    Memories are short and the fact that, for many, debt controls them (rather than the other way round) makes me nervous.

  2. £44000 average student debt, borrowed house deposit, 30 year mortgage, naff pension schemes; life is not so great for the younger generation

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