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 (63%) of 20 to 45-year-olds who have been able to buy received help from their parents, and six in 10 people in ‘generation rent’ agree that there is now an expectation for parents to help young people buy their first home.
Halifax says that for parents, this belief can bring with it a significant emotional and financial burden. By looking at how the parents of prospective owners view today’s market it becomes apparent as to just how invested they are in helping their children achieve the dream of homeownership.
• 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
57% of parents of 20-45 year olds have already done, or would expect to do, something to help their children onto the property ladder:
• 44% either already have or expect to have to help their child with a deposit
• 37% either already have or expect to have to help their child with the cost of moving
• 18% either already have or expect to have to be a guarantor on their child’s mortgage.
• 14% either already have or anticipate that they will contribute to the monthly payments of their child’s mortgage
This is also a marked shift in the sacrifices that the parents of generation rent made to get themselves on the property ladder compared to current homeowners aged 20-45. This generation of homeowners is far more likely than the preceding one to have lived with their parents for longer (31% vs. 15%) or borrowed money from their friends/family (23% vs. 9%) 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 timescales and ways in which this can be achieved without either party being overstretched of facing longer term financial difficulty as a result.”
*source EAToday