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."
Matt Burton, director of mortgages at lifetime lender Hodge, said: "Getting a deposit together continues to be a significant barrier for first-time buyers, even with the Help-to-Buy scheme.
"Simply put, with house prices rising substantially over the past few years, even younger people who would have no problem passing mortgage eligibility checks are still being priced out of the market."
Mr Burton said Hodge's own data showed a growing trend in people looking to Rio mortgages and equity release to allow them to free up funds to help their children get on the property ladder and stressed that the research showed the older generation was continuing to contribute significantly towards the economy and housing market well into later life.
Will Hale, chief executive of equity release advice firm Key, agreed that intergenerational giving was increasing.
He added: "However, analysis from the Equity Release Council suggests that for the over-65s, 40p in every pound of their assets is tied up in residential property so it would seem logical to see more people looking to this asset to help their children or grandchildren onto the property ladder."
imogen.tew@ft.com
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