New study reveals value of ‘bank of mum and dad’ for home buyers

Young homebuyers are finding it increasingly more difficult to get onto housing ladder

One in five homeowners making their second move on the property ladder are receiving financial assistance from family or friends, new research indicates, highlighting the enduring role of the 'Bank of Mum and Dad' in the UK housing market.

While 30 per cent of first-time buyers reported receiving such support, the Barclays’ property insights report found that this trend extends to 20 per cent of those progressing to their second home.

First-time buyers receiving this aid obtained an average of £76,239, while 'second steppers' secured an even higher average of £81,451 towards their home purchase.

Notably, nearly three in 10 (27 per cent) homeowners who received financial help for their second or third properties also reported benefiting from support for their first home.

This crucial backing typically comes in the form of lump sum gifts from parents, inheritances, or loans provided by family members or friends.

Around half (52 per cent) of renters in the survey also said they would find it impossible to buy a home without an inheritance or loan from a family member.

Younger buyers are using the 'Bank of Mum and Dad' to afford a move up the housing market

One in six renters (16 per cent) said they plan to buy property in the next year, but more than two-thirds (68 per cent) of these prospective home buyers said property prices are an obstacle to achieving that goal.

Six in 10 (59 per cent) also said they were struggling with “moving goalposts”, with the savings goal increasing to keep pace with house price growth.

Jatin Patel, head of mortgages, savings and insurance at Barclays, said: “Our latest data highlights a market in transition. Though first-time buyers are often thought of as the main beneficiaries of the bank of mum and dad, second-steppers’ reliance on family support underlines the impact of cost-of-living pressures on all sections of the market.”

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Julien Lafargue, chief market strategist at Barclays, said: “With the budget now published, clarity has improved allowing economic actors to start planning ahead. For the property market, this should mean a greater level of activity as we move into the new year.

“That said, affordability remains a challenge which can be overcome through a combination of lower interest rates, greater housing availability, and financing innovation.”

The research highlights how the ‘bank of mum and dad’ may be called upon more than once by an adult child for help with a home purchase (Yui Mok/PA)

Barclays commissioned Opinium Research to survey 2,000 people across the UK in November and December.

Aneisha Beveridge, head of research at property firm Hamptons, said: “The bank of mum and dad is no longer just a lifeline for first-time buyers – it’s increasingly supporting second and even third steppers.

“Upsizing has become significantly more expensive in recent years, largely because house prices have risen much faster than flat prices.

“Traditionally, homeowners would borrow more to cover the higher purchase price and stamp duty bill, but with mortgage rates still elevated, stretching affordability has become far harder and more costly.

“As long as rates remain above the ultra-low levels of the past decade, family assistance looks set to become a more permanent fixture of the housing market.”