More than half of first-time buyers received financial help from their family to make house purchases last year, according to estimates by estate agency Savills. An average of £55,572 was given in loans and gifts by the so-called bank of mum and dad to buyers, it said. Young buyers faced relatively high mortgage rates in 2024, while also seeing the cost of renting increase. More recently, changes to stamp duty led to a rush of new buyers before the end of March, but greater costs for anyone who missed that deadline. The annual report by Savills suggests that 52% of first-time buyers received assistance from the bank of mum and dad last year, which could also include other donors from the family. This was a slightly lower proportion than the 57% of the previous year, but higher than every other year since 2013. Family assistance peaked in 2009 during the fallout from the financial crisis, when 70% of first-time buyers received help, the estate agency's figures suggest. It estimated 173,500 first-time buyers received assistance last year, receiving a total of £9.6bn. The findings are based on first-time buyer and average loan-to-value data, as well as how this relates to responses from various surveys about family support. The average rate for all new two and five-year fixed mortgages last year was between 5% and 6%, figures from financial information service Moneyfacts show. That rate would be higher for many first-time buyers unable to offer a large deposit, and much higher than a few years earlier. Buyers facing that scenario "took advantage of greater family support to try and secure a deal at a lower mortgage rate", according to Lucian Cook, head of residential research at Savills. "First-time buyers are still feeling the impact of higher mortgage rates and tougher lending criteria," he said. Many potential first-time buyers have also faced financial strain from the rising cost of living, and particularly from the greater expense of renting, although the latter may have encouraged more to get on to the ladder more quickly. The annual increase in rent paid to private landlords breached 9% last year, forcing manyto live with their parents in their 20s and 30s. Financial assistance varies across the country, as do house prices and average incomes. And stamp duty, which was primarily levied on buyers in the south of England, changed in April. First-time buyers of homes bought for more than £300,000 in England and Northern Ireland must now pay stamp duty, compared with the previous threshold of £425,000. Data suggests that led toa surge in first-time buyer purchasesahead of the deadline. Analysis by the Yorkshire Building Society suggests the first three months of this year saw the highest number of first-time buyer applications since the 2022 post-Covid peak. Mr Cook, from Savills, added that the likelihood of regulators allowing lenders toloosen some of their lending criteriacould also benefit first-time buyers and their families. "[This means] lowering the barrier for entry and allowing first-time buyers to qualify for larger mortgages," he said. "So, although more first-time buyer activity may mean more bank of mum and dad assistance, this is likely to be at a lower average cost per first-time buyer."
Bank of mum and dad 'helps half of first-time buyers'
TruthLens AI Suggested Headline:
"Savills Report: Over Half of First-Time Buyers Receive Family Financial Support"
Bbc News
8.0
TruthLens AI Summary
A recent report by estate agency Savills reveals that over half of first-time homebuyers in the UK were financially supported by their families in the past year. Specifically, 52% of first-time buyers received assistance from the so-called 'bank of mum and dad,' which translates to an average contribution of £55,572 in loans and gifts. This figure represents a slight decline from the previous year's 57% but remains higher than any year since 2013. In total, approximately 173,500 first-time buyers benefited from family aid, amounting to a staggering £9.6 billion. The report highlights the ongoing challenges faced by young buyers, who are grappling with elevated mortgage rates and rising rental costs, prompting many to seek support from their families. The average mortgage rates for new two and five-year fixed deals hovered between 5% and 6%, a significant increase compared to previous years, making it even more difficult for first-time buyers to secure favorable loan terms without substantial deposits.
The landscape for first-time buyers has also been influenced by recent changes in stamp duty regulations, which saw many rush to make purchases before the new rules took effect at the end of March. Under the revised regulations, first-time buyers of homes priced over £300,000 in England and Northern Ireland are now liable for stamp duty, a decrease from the previous threshold of £425,000. This shift has driven a notable spike in first-time buyer applications, with early 2023 witnessing the highest number since the post-Covid peak in 2022. Furthermore, the rising cost of living and significant increases in private rental prices—over 9% last year—have led many young adults to reside with their parents longer, thereby increasing the demand for family support in home purchases. As the market adapts, there is speculation that regulatory changes may enable lenders to ease some lending criteria, potentially allowing first-time buyers and their families to access larger mortgages more easily, albeit at a lower average cost per buyer than seen in previous years.
TruthLens AI Analysis
The article sheds light on the growing trend of financial assistance from family members, termed the "bank of mum and dad," for first-time home buyers in the UK. This financial support has increasingly become a necessity in the current housing market, particularly in light of rising mortgage rates and escalating rental costs. While the report indicates a slight decrease in the proportion of buyers receiving help compared to the previous year, the figures remain significant when viewed in the broader context of historical data.
Financial Dynamics of Home Buying
The data presented by Savills shows that over half of first-time buyers are relying on family support, with an average of £55,572 being provided. This trend underscores the financial strain that young buyers face, particularly in an environment where mortgage rates have surged to between 5% and 6%. The increasing reliance on family assistance suggests that many young individuals are struggling to enter the housing market independently.
Contextual Economic Factors
The article highlights several economic pressures affecting potential buyers, including the rising cost of living and higher rents. These factors contribute to a challenging environment for first-time buyers, which may further entrench reliance on familial support. This context paints a picture of a generation grappling with financial barriers that previous generations may not have faced to the same extent.
Historical Trends and Future Implications
The historical context provided in the report indicates that family support peaked at 70% during the financial crisis in 2009, suggesting that economic downturns significantly impact home-buying behaviors. The current figures, although lower than during that peak, reflect a persistent trend that may influence the housing market's dynamics in the future, particularly as younger generations continue to seek financial assistance to navigate high property prices.
Public Perception and Societal Implications
This article subtly communicates a narrative that may evoke empathy towards first-time buyers, fostering a perception that housing affordability is a pressing societal issue. By detailing the reliance on family support, it may also invoke broader discussions about wealth distribution and economic mobility, prompting readers to consider the implications of familial assistance on societal equity.
Potential Manipulation and Trustworthiness
While the article presents factual data, there may be an underlying agenda to highlight the struggles of young buyers, potentially suggesting a need for policy changes or greater societal support mechanisms. The language used is factual yet emotional, aiming to resonate with readers experiencing similar challenges. However, the reliance on one perspective may limit a more nuanced understanding of the issue.
The reliability of the article is bolstered by statistical evidence and reputable sources, although the framing may lean towards a particular narrative. Overall, it serves as a significant commentary on the current state of the housing market and the evolving role of familial financial support.