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Trends Suggest Use of “Bank of Mum and Dad” Is Back

Is the so-called “Bank of Mum and Dad” on its way back? While many first-time buyers do receive some form of financial support from their parents, recent data suggests that this trend may be on the rise.

Obviously, the pandemic had a huge impact on the housing market, causing fluctuations in house prices, essentially closing the market for several months and causing a huge rush as people tried to make the most of the stamp duty holiday.

For first time buyers, however, who are mostly exempt from stamp duty regardless, the pandemic may have actually had a negative impact on their ability to buy a house, with many being priced out of moves amidst the extreme demand. House prices have continued to increase, meaning it’s harder than ever to take the first step onto the housing ladder.

In this article, we’re going to look at some recent research and data identifying trends around first time buyers and the use of the bank of Mum and Dad. Read on to find out more.

Are first time buyers getting more parental support?

The first thing to investigate is whether first time buyers are returning to the market after the stamp duty holiday has recently ended, and whether they’re receiving parental support at similar levels.

According to recent data from Knowledge Bank, a database for mortgage criteria, searches on their index for “joint borrower sole proprietor” mortgages were increasing. These types of mortgages are popular with first-time buyers who can add a parent or relative’s income to the application to be eligible for a larger loan.

So, it seems that the number of first-time or young buyers using parental support to buy homes has risen back to pre-pandemic levels, perhaps as a result of the stamp duty holiday ending and this therefore reducing the competition for homes on the market.

However, the data from Knowledge Bank also shows strong interest in buy-to-let mortgages, suggesting that there’s still strong interest in the housing market from more established investors.

Could even more parental assistance be available?

The other recent piece of data suggests that first-time buyers may actually be underestimating the amount of parental support that’s on offer, despite the recent increase to the number of people receiving it.

The data, from the Building Societies Association, showed that 58% of potential first-time buyers do not expect any financial assistance from their older relatives, but that 71% of parents expect to provide some financial help – so that there is potentially a mismatch of expectations when it comes to finances.

In addition, 41% of parents expect to provide some form of monetary gift towards their children buying a first home, but only 24% of first-time buyers expect to receive this – again suggesting that more support may be available than many would-be home buyers are imagining.

This may mean that there are first-time buyers who believe that taking the first step onto the property ladder is unaffordable, but they actually could take that first step with the support of their parents or other relatives.

In truth, the only way for people to understand their financial situation, and that of their families is to sit down and have a frank and honest conversation about expectations and the financial realities. Without this conversation, first-time buyers may find they’re relying on support that isn’t there, or missing out on money that could help them take that all-important first step.


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