A new study by Legal & General and the Centre for Economics and Business Research (Cebr) reveals significant variations in family lending across the UK.
Despite universal affordability issues, the level of financial support varies depending on the region.
Kevin Roberts, managing director of Legal & General Mortgage Services, said: “Up and down the country, the Bank of Family is making significant financial sacrifices to help family members onto the housing ladder. Support is concentrated in urban and southern areas, where house prices are the highest, but is prevalent across the UK.”
The East of England leads in the average amount of family financial support, with recipients receiving an average of £32,100. Conversely, the West Midlands sees the least financial support, averaging at £19,800.
The data further indicated a distinct gap between urban and rural family lending. The Bank of Family is set to support 216,500 urban home purchases in 2023, compared to 100,500 in rural areas.
Roberts added: “While a brilliant lifeline for those able to draw on it, many people will not have access to such generosity and this widespread support is indicative of deep, underlying affordability issues affecting the UK.”
The study also highlighted that just 39% of borrowers are seeking professional advice from a mortgage broker or financial adviser before accepting family support. Gender appears to be a factor in this decision, with women (46%) more likely than men (30%) to seek professional advice.
Roberts concluded: “The Bank of Family has not only become a major lender but also a significant source of financial advice, with less than 40% of financial aid recipients seeking professional guidance before their transactions. In such a challenging economic climate, buyers must not overlook the insights that an adviser can bring to even the most complex of property transactions.”
Reaction
Jonathan Stinton, head of intermediary relationships at Coventry for intermediaries:
“The number of new borrowers who need financial support from family to get onto the property ladder is soaring on a national scale, with contributions only expected to grow further amidst the cost of living crisis. Given this trend is set to continue, lenders must continue to adapt to help make sure all those looking towards the goal of homeownership are supported.
“Widening criteria to allow gifted deposits from extended family members, such as aunts and uncles, while offering the option of placing a second charge on the gifted deposit element, is one example of how lenders can adapt their policies to better meet the needs of aspiring homeowners. Whilst, competitive savings products, specifically geared up to help people save for their first home, also go a long way in supporting the next generation of buyers.
“Brokers can really add value to homebuyers by helping them choose a product that’s right for their individual circumstances. As more innovative solutions enter the market, brokers, who are industry experts with access to a variety of products, are in the best position to provide the tailored advice buyers need in this changing market.”
