The Bank of Mum and Dad is becoming ever more important in the modern housing market, with an increasing number of buyers turning to their parents to help them onto the housing ladder.
A new report by the Centre for Economics and Business Research showed that parents lent £6.3bn to their offspring in the last year. This was 10% higher than the previous year and makes the Bank of Mum and Dad equivalent to the 11th largest mortgage lender in the UK.
Some 259,400 property purchases were made using parental support, equivalent to 19% of all mortgage transactions in the UK.
London was the region where parents offered the biggest financial contribution, at £31,000. The West Midlands was the lowest with an average of £13,700.
This cash injection from parents has helped more people to buy their first house, according to data published by the UK Finance trade body. It found that there were 27,370 new first-time buyer mortgages completed in April 2019. This is 7.9% up compared to the same month last year.
Other areas of the market also performed strongly, with homemover mortgages rising 6.4% from 2018 to reach 25,450.
However, activity in the remortgage market has fallen back from the peaks seen in 2018. There were 18,920 new remortgages (with additional borrowing) during the month, down 0.3% year-on-year.
There were also 19,140 pound-for-pound remortgages where no additional borrowing took place. This was 6.2% lower than a year ago.
The buy-to-let market remained consistent, with similar numbers of new mortgages and remortgages completed in April 2019 as in April 2018.
Increased product choice may be a reason for the continued demand in the market, as new data from Moneyfacts showed that landlords have a much greater choice of products than previously.
The data said there were 2,396 buy-to-let mortgages on offer from UK lenders in June 2019. This is the highest recorded since October 2007, when 3,305 products were available. The number of products has risen by 143 in the last month alone.
However, rates have increased slightly in the last year. The average two-year buy-to-let mortgage rate has increased from 2.88% in June 2018 to 3.05% one year later.
In the five-year market, average rates increased by 0.11% to 3.54%, rising from 3.43% over the last year.
Separate figures published by the Office for National Statistics showed that, in general, house prices have continued to rise, although some regions saw prices fall compared to 2018.
The average UK house price stood at £229,000 in April 2019. This is £3,000 higher than the same period a year ago.
However, two regions saw prices drop in the same time frame. Prices in both London and the South East fell by 1.2% and 0.8% respectively compared to April 2018.
But, despite this fall, London remains the most expensive place to buy in the UK, with an average property price of £472,000.
Richard Sexton – Business Development Director, e.surv Chartered Surveyors