Half of first-time buyers helped by Bank of Mum and Dad, says Savills
Cost of living correspondent
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A significant number of first-time buyers sought financial assistance from their families to facilitate home purchases in the previous year, as per estimates provided by estate agency Savills.
On average, first-time buyers received £55,572 in loans and gifts from their families, often referred to as the bank of mum and dad.
Young buyers encountered relatively high mortgage rates in 2024, coupled with escalating rental costs.
Recent changes to stamp duty resulted in a surge of new buyers before the deadline, with additional costs for those who missed the cutoff.
Enhanced Support for Better Deals
Savills’ annual report indicates that 52% of first-time buyers received aid from the bank of mum and dad in the previous year, which may also involve contributions from other family members.
While this figure is slightly lower than the previous year’s 57%, it remains higher than any other year since 2013.
Family support peaked in 2009 during the aftermath of the financial crisis, with 70% of first-time buyers receiving assistance, according to Savills’ data.
It is estimated that 173,500 first-time buyers received financial aid last year, amounting to a total of £9.6 billion.
These findings are based on first-time buyer statistics, average loan-to-value data, and survey responses regarding family support.
In 2024, the average rate for new two and five-year fixed mortgages ranged between 5% and 6%, as per data from financial information service Moneyfacts.
For many first-time buyers unable to provide a substantial deposit, this rate would be higher, significantly surpassing rates from previous years.
Buyers grappling with this situation sought increased family support to secure mortgages at lower rates, according to Lucian Cook, Savills’ head of residential research.
Cook mentioned, “First-time buyers continue to feel the impact of elevated mortgage rates and stringent lending criteria.”
The rising cost of living, particularly the surge in rental prices, has placed significant financial strain on many prospective first-time buyers.
Last year, the annual increase in rent paid to private landlords exceeded 9%, leading numerous individuals in their 20s and 30s to reside with their parents.
Financial assistance varies regionally, influenced by disparities in house prices and average incomes.
Moreover, changes in stamp duty, predominantly affecting buyers in southern England, took effect in April.
First-time buyers in England and Northern Ireland now face stamp duty on homes exceeding £300,000, compared to the previous threshold of £425,000.
This adjustment prompted a surge in first-time buyer transactions before the deadline.
Analysis by the Yorkshire Building Society indicates the highest number of first-time buyer applications in the first quarter of this year since the peak post-Covid in 2022.
Cook suggested that regulatory authorities potentially relaxing lending criteria could benefit first-time buyers and their families.
He stated, “This could lower the entry barrier, enabling first-time buyers to qualify for larger mortgages.”
“Therefore, while increased first-time buyer activity may lead to more support from the bank of mum and dad, the average cost per first-time buyer is likely to decrease.”
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