In 2023, the Bank of Mum and Dad has been busier than ever!
According to Savills, more than half of mortgaged first-time buyers received family support, the highest proportion since 2012. This surge has been driven by a more stringent mortgage market and higher mortgage rates, almost doubling the amount of family assistance since 2019.
A whopping 164,000 first-time buyers leaned on family to purchase their first home this year, making up 57% of all mortgaged first-time buyers. Although this is down from the peak of 198,000 in 2021, it's still a significant 10% increase from 2022.
But there may be light at the end of the tunnel! Savills predicts that as mortgage rates continue to decrease, fewer first-time buyers will need to tap into the Bank of Mum and Dad. While the actual number of those supported is expected to stay the same, the proportion of first-time buyer purchases receiving family help will drop from 57% in 2023 to 54% in 2024.
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The total contribution towards first-time buyer purchases will remain steady at £9.3 billion, with nearly £30 billion expected to be paid out over the next three years. Frances McDonald, director of residential research at Savills, notes that despite the Bank of England's recent decision to cut the base rate, lenders will likely continue to favour less risky, lower LTV mortgage lending. This means that buyers will still face challenges getting their first foot on the housing ladder.
For those with the option of family support and secure employment, the journey to homeownership will be smoother. However, only the highest earners and those with significant family assistance are likely to afford top-end market properties.
So, while the Bank of Mum and Dad remains a crucial player in helping first-time buyers, the landscape is slowly shifting towards a more balanced market. Keep an eye on those mortgage rates, and happy house hunting!
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