First-time buyers are expected to receive nearly £30 billion in support from their parents over the next three years, as the housing market becomes increasingly inaccessible for independent young buyers.
According to recent analysis by property firm Savills, the “Bank of Mum and Dad” provided £9.4 billion in gifts and loans in 2023. This amount has nearly doubled in the past five years due to soaring mortgage rates, rising rents, and general living costs, which have diminished tenants’ ability to save.
In 2023, 164,000 first-time buyers received family assistance, representing 57% of all mortgaged first-time buyers—the highest proportion since 2012.
Frances McDonald, Director of Residential Research at Savills, noted, “While many homebuyers benefited from record low interest rates earlier in the decade, stricter mortgage requirements have impacted high loan-to-value lending, which is most commonly used by first-time buyers.” She also pointed out that record rental growth and increased mortgage rates have further hindered first-time buyers’ ability to own a home.
Recent data reveals that UK private rents rose by 8.6% in the year leading up to July 2024, making saving for a house increasingly difficult. In London, rents surged by 9.7% to £2,114 per month. One analyst described the housing market as a “pressure cooker ready to explode.”
Patricia McGirr, Founder of Repossession Rescue Network, commented, “House prices are becoming unaffordable for many, and escalating rents are turning the cost of housing into an unsustainable financial burden. It’s a social crisis in the making.”
Looking ahead, Savills forecasts a slight decrease in the proportion of first-time buyers receiving support—from 57% in 2023 to 54% in 2024. This change is partly due to anticipated reductions in mortgage rates, with the Bank of England’s recent interest rate cuts helping to improve market sentiment.
However, McDonald warns that not all buyers will benefit from these lower rates. “Despite the Bank of England’s base rate cuts, lenders are likely to continue favoring lower loan-to-value (LTV) mortgages, making it challenging for many first-time buyers to enter the market,” she said. “Those with family support and stable employment will find it easier to get onto the housing ladder, but only the highest earners and those with substantial family support are likely to purchase high-end properties.”Source link
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By Benjamin
First-time buyers are expected to receive nearly £30 billion in support from their parents over the next three years, as the housing market becomes increasingly inaccessible for independent young buyers.
According to recent analysis by property firm Savills, the “Bank of Mum and Dad” provided £9.4 billion in gifts and loans in 2023. This amount has nearly doubled in the past five years due to soaring mortgage rates, rising rents, and general living costs, which have diminished tenants’ ability to save.
In 2023, 164,000 first-time buyers received family assistance, representing 57% of all mortgaged first-time buyers—the highest proportion since 2012.
Frances McDonald, Director of Residential Research at Savills, noted, “While many homebuyers benefited from record low interest rates earlier in the decade, stricter mortgage requirements have impacted high loan-to-value lending, which is most commonly used by first-time buyers.” She also pointed out that record rental growth and increased mortgage rates have further hindered first-time buyers’ ability to own a home.
Recent data reveals that UK private rents rose by 8.6% in the year leading up to July 2024, making saving for a house increasingly difficult. In London, rents surged by 9.7% to £2,114 per month. One analyst described the housing market as a “pressure cooker ready to explode.”
Patricia McGirr, Founder of Repossession Rescue Network, commented, “House prices are becoming unaffordable for many, and escalating rents are turning the cost of housing into an unsustainable financial burden. It’s a social crisis in the making.”
Looking ahead, Savills forecasts a slight decrease in the proportion of first-time buyers receiving support—from 57% in 2023 to 54% in 2024. This change is partly due to anticipated reductions in mortgage rates, with the Bank of England’s recent interest rate cuts helping to improve market sentiment.
However, McDonald warns that not all buyers will benefit from these lower rates. “Despite the Bank of England’s base rate cuts, lenders are likely to continue favoring lower loan-to-value (LTV) mortgages, making it challenging for many first-time buyers to enter the market,” she said. “Those with family support and stable employment will find it easier to get onto the housing ladder, but only the highest earners and those with substantial family support are likely to purchase high-end properties.”
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