Older family members across the UK will lend more than £6bn to help their loved ones get on the housing ladder this year, according to research.
The data from Legal & General showed that total lending from family members is set to increase to £6.3bn in 2019 — up 10 per cent on last year and making the ‘bank of mum and dad’ the equivalent of the eleventh largest mortgage lender in the UK.
L&G polled 1,745 borrowers and 2,061 lending adults in April and found that on average, parents will contribute about £24,100 to housing costs — up £6,000 on last year’s average of £18,000 — and will help buyers to purchase a total of nearly £70bn of property wealth this year.
Average loan sizes increased the most in the north west — doubling from £12,900 to more than £24,000 — while parents in the south west will give about £10,000 more than last year with the average loan reaching £29,700.
Bank of mum and dad lenders in London are contributing the most to help family or friends onto the ladder at an average loan size of £31,000.
However, the ‘family bank’ is set to fund nearly 20 per cent fewer property purchases in 2019 than in 2018, at a quarter of a million, although this could be attributed to a general decline in transaction numbers across the UK housing market.
L&G also found parents weren't solely helping young or first-time buyers.
Those aged 35 and under continued to rely on their parents the most, with 62 per cent needing financial support, but more than a fifth of people aged 45-54 have also received financial assistance to purchase their latest property.
On top of this, about 7 per cent of over-55s have received help from family or friends to buy their most recent home.
Parents are expected to make the biggest contribution to family members, responsible for £4.4bn of lending, while grandparents will lend £657m in 2019.
Other family members and friends will help more than 51,000 buyers by lending £1.2bn to help others buy a home.
According to the research, most of these lenders are using cash savings but this year unlocking housing wealth jumped to become the third largest source of funds as 16 per cent of these loans were funded by equity release.
Nigel Wilson, group chief executive at L&G, said: "The bank of mum and dad continues to be the ‘iceberg’ mortgage lender beneath the surface of our housing market — all but invisible yet exerting a massive influence, funding purchases across the country and helping people to defy the economics of affordability and realise their housing dreams."
Mr Wilson said reliance on the bank of mum and dad was a symptom of Britain’s broken housing market and showed an increasingly skewed facet of the system.
He added that it was "socially divisive" as many were not lucky enough to benefit from this kind of help.
He said: "Real action is needed to deliver thousands more new and affordable homes to change the market for good, across a range of tenures."