There is strong evidence, both statistical and anecdotal, that young and not so young people are increasingly relying on assistance from relatives (usually parents) to secure a mortgage.This phenomenon is most pronounced amongst relatively affluent people and in the areas of southern England where homes are most expensive, but it can be observed across the UK. It is a response to continued rises in house prices relative to incomes, to reduced availability of high-LTV mortgages in the years after the global financial crisis (GFC) and to the growing value of parental home equity.
In recent years, there have been various estimates of the overall contribution of the ‘Bank of Mum and Dad’ to children’s housing acquisitions and much discussion of its implications for the younger generation. However, the phenomenon has been little explored at anything other than the most general level.
This report examines parental help from the perspective of the families involved. It casts light on how families make these often difficult decisions, on the mechanisms used for providing assistance and the issues that arise before and during the transaction. We spoke to specialist lenders, government and brokers about how they see this market and its implications. And we heard from hundreds of individuals, both donors (generally older people) and beneficiaries (generally younger); because of their thoughtfulness and honesty this report adds to our understanding of the perceptions and attitudes towards family help.
Our findings add nuance to current debates about intergenerational fairness, concentration of wealth (Piketty, 2017) and the falling rate of home ownership among young people (Cribb et al., 2018).