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The Bank of Mum and Dad will be a key driving force behind the post-coronavirus recovery within the UK housing market, according to new analysis.
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Nearly one in four housing transactions – 23 per cent – will be supported by the Bank of Mum and Dad (BoMaD), a four per cent rise since 2019, according to new research by Legal and General.
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And 24 per cent of borrowers are now more reliant on financial support from family due to the pandemic.
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The amount the BoMaD will lend this year is almost half of the total of 2019 as the housing market effectively locked down during the peak of the pandemic.
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Families will lend £3.5bn to loved ones this year, compared to £6.3bn a year earlier, which will fund 85,000 fewer home purchases.
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Of those who have recently bought a house and received support from loved ones, 65 per cent said it would have been “unlikely” without the BoMaD. L&G’s analysis shows the BoMaD will be even more generous than usual this year, lending on average £20,000 towards deposits.
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Homebuyers in London are set to receive the most, with the average BoMaD “loan” standing at £25,800.
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“While the Bank of Mum and Dad is leaning in to help those lucky enough to have its backing, a generation of hopeful buyers without the support of BoMaD could find themselves locked out of the housing market”, said Nigel Wilson, L&G chief executive.
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The government reopened the UK housing market on 13 May after lockdown, and has since announced a stamp duty holiday to reignite the housing market.
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While there was a collapse in purchases in the first half of the year, L&G’s analysis shows the BoMaD will be involved in 175,000 housing transactions with an estimated transaction value of £50.3bn.
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Wilson added: “Whilst the generosity of the Bank of Mum and Dad is undoubtedly helping hundreds of thousands of loved ones to realise their homeownership goals every year, it remains a symptom of our broken housing market.”
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“Our reliance on BoMaD is unfair and unsustainable, and it’s putting retirements at risk as parents and grandparents try to help their kids to have a similar standard of living as they enjoyed.”
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By Angharad Carrick
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Source: City AM
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