BSA – Bank of Mum and Dad to play an increasing role
The Building Societies Association believes that the Bank of Mum and Dad will continue to play an increasing role in helping first-time buyers over the next 5-10 years.
87% of building societies predict that family lending will expand and the BSA says that with the right support, this could happen without jeopardising the long-term financial wellbeing of older generations.
The Association welcomed a rise in product innovation which is increasing the options beyond straight gifting. 59% of building societies will now accept a deposit from family members as security, 33% will accept a charge over the property of family members to ease affordability barriers and 10% offer family offset mortgages.
However it wants to see more products and innovation from lenders and a way to mitigate the impact of regulations and taxes that limit lending or how property wealth can be put to use.
Its research found that more than half (59%) of aspiring first-time buyers expect the ‘Bank of Mum and Dad’ to support them onto the housing ladder.
Bob Pannell, co-author of the report, said: “Our young people face huge challenges in buying their first homes. Families instinctively want to help, and it’s the job of lenders, regulators and government to ensure that they have more opportunities to do so in a sustainable way.”
Robin Fieth, chief executive of the BSA, added: “Home ownership remains a fundamental ambition for the majority of people. Against the challenging backdrop of high prices, a woefully inadequate supply of homes and a growing intergenerational divide, new ideas and strong debate are essential. Family help – the so-called ‘Bank of Mum and Dad’ – is great for those fortunate enough to have this option, but innovations in underwriting could help all potential first-time buyers.”
Source: Financial Reporter