Savills: Bank of Mum and Dad set for busier 2023

It was a busy 2022 for the so-called Bank of Mum and Dad and 2023 could be more manic for parents, according to Savills.

Research by the property brand has revealed that gifts and loans from parents to their children to help them onto the property ladder totalled £8.8bn in 2022.

This amount has increased by almost £4bn since the start of the pandemic in 2019 as a result of a more stringent mortgage market and higher deposit requirements, Savills said.

In total, 170,000 first-time buyers had family assistance in getting their mortgage in 2022, accounting for around 46% of all mortgaged first-time buyers.

That was down from a peak of 198,000 in 2021 but Savills predicts this number is expected to jump to 61% in 2023, a figure not seen since before Help to Buy was introduced. 

The agent has suggested that higher mortgage rates and the end of Help to Buy will increase lending from the Bank of Mum and Dad.

Savills has forecast that mortgaged first-time buyer transaction numbers will fall back to approximately 200,000 in 2022, 43% below the pre-pandemic norm. 

The total contribution of gifts and loans is also expected to fall, as a reflection of overall transaction numbers in 2023, but is still expected to total £26bn over the next three years.

Frances McDonald, research analyst at Savills, said: “Since the Help to Buy scheme was introduced in 2013 it has supported more than 335,000 first-time buyers – providing £2.2bn of financial assistance in 2022 alone, bringing the total support received by first-time buyers to more than £11bn. 

“With no obvious scheme expected to replace the support provided, a far greater proportion of buyers will be relying on family members to help them to take their first step onto the property ladder.

“Mortgage rates for high loan-to-value (LTV) products have increased significantly since last year, and lenders are still likely to continue favouring less risky, lower LTV mortgage lending which makes it harder for first time buyers. 

“Those who have the option of family support and are secure in their employment will find it much easier to get onto the housing ladder and only the highest earners and those who have received significant support are likely to be able to buy at the top end of the market.”