Bank of mum and dad set to stay open for the foreseeable future
New research has shown that 70% of the public see getting on the housing ladder as one of the biggest challenges faced by the UK today.
The report, from the Building Societies Association (BSA), also predicts that the much-discussed ‘bank on mum and dad’ will play an increasing role in first-time buyer purchases over the next decade.
This, according to the BSA, is no bad thing, and can involve more than lump-sum gifts or loans from parents and grandparents.
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With 86% of UK residents aspiring to home ownership, the report highlights new ideas for helping more young people onto the housing ladder.
Says Robin Fieth, BSA chief executive: “Against the challenging backdrop of high prices, a woefully inadequate supply of homes and a growing inter-generational divide, new ideas and strong debate are essential.
“Family help, the so-called bank of mum and dad, is great for those fortunate enough to have this option, but innovations in underwriting could help all potential first-time buyers.”
The research reveals that lenders are beginning to offer innovative loans that allow costs to be spread across generations. Typically, these flexible mortgages involve parents using savings or property as guarantees for a first-time buyer’s mortgage.
Figures in the report show that 59% of first-time buyers look to their parents for some support onto the housing ladder. At the same time, 59% of building societies say they will accept a deposit from a family member.
In addition, 10% of building societies offer family offset mortgages – where the deposit sits in a savings account in a family member’s name earning interest to offset mortgage payments.
According to the report’s co-author Bob Pannell: “Our young people face huge challenges in buying their first homes. Families instinctively want to help, and it’s the job of lenders, regulators and government to ensure that they have more opportunities to do so in a sustainable way.”
Read more about this story on the Property Wire website.
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