Parents risk financial future to help children onto the ladder
A new report from the Halifax shows that parental support has become a necessity in order for their children to get on the housing ladder.
Two-thirds of 20 to 45-year-olds who have been able to buy received help from their parents believe that there is now an expectation for parents to help young people buy their first home.
- 38% of parents who have given financial support to their children to buy a property are concerned about their own financial future as a result
- 92% of parents think that it’s hard or impossible for first time buyers to obtain a mortgage
- 25% of parents said their children had moved back in with them after moving out as a result of not being able to buy their own property
- After helping a child buy a property, 92% of parents would not anticipate their children to help them out financially in return
These figures marked shift in the sacrifices that parents made to get themselves on the property ladder when compared to current home owners aged 20-45. This generation of home owners is far more likely than the preceding one to have lived with their parents for longer or borrowed money from their friends/family in order to pull together a deposit.
These kinds of sacrifices can have real impact on the financial futures of the parents. Of those whose children have bought a home, 27% dipped into their savings and 10% gave their child an early inheritance to help them get on the ladder, with a third of those parents that have helped their children either concerned or very concerned that it may affect their financial future in later life/retirement.
Craig McKinlay, mortgages director at Halifax, said: “For many buyers, parental support is now the fundamental first step onto the property ladder. For parents whose children are looking to buy, and the those first time buyers now wanting to own, real consideration needs to be given to set realistic time scales and ways in which this can be achieved without either party being overstretched of facing longer term financial difficulty as a result.”
Richard Antrobus, Director of VitalSpace Estate Agents, said “Over the last 6 to 8 months, I have seen an increase in parental support in the Manchester housing market. A large percentage of first time buyers are obtaining mortgages with at least a 10% deposit funded mainly from parental contribution. With low interest rates, parents turn to the rising property market as a safe home for their money.”
