Despite a rapidly escalating rise in the cost of living, it seems that the Bank of Mum and Dad remains open for business with an average of £13,088 gifted to help support their children’s future savings goals.
However, according to new research by mortgage lender, Generation Home, parents are twice as likely to offer their adult children (aged 18-34 years old) significantly more if they knew it would be protected by a formalised loan, to be repaid over an agreed period of time. When asked how much they would be willing to gift, 10% said £10,000 to £50,000, but this almost doubles, rising to 19% if they knew the loan was going to be repaid.
While parents will happily part with an average of £13,088 to help support their children’s future savings goals – this amount increases to £22,093 – if the money was guaranteed to be treated as a loan.
In today’s property market, the average UK house price now costs approximately £277,0002 and full-time workers can expect to spend at least 9.1 times their annual earnings to be able to afford a home.
Parents say their savings are also under pressure from everyday bills and the cost-of-living crisis, with 37% open to the idea of gifting financial support but simply unable to do so.
However, the research found just under half the parents surveyed would prioritise helping with the deposit for their child's first home (46%), compared to 10% for higher education, a wedding, or a car (7%). Overall, two-thirds of parents said they would help financially with 26% happy to gift money without any agreement on how it would be spent.
The findings show there is a growing realisation from both parents and young adults that major financial milestones – such as buying a first home - won’t be possible without adequate financial support. The research proves wealth transfer between the generations is widely acknowledged as an untapped solution if the correct protections are in place.
Sophia Guy-White, Co-founder of Generation Home, commented: “With so many factors stacked against first-time buyers amid the backdrop of this year’s even tougher financial climate, it’s easy to think the doors of the property market are completely slammed shut.
"Generation Home is committed to helping parents who want to provide financial support but fear the uncertainty of gifting substantial sums of money as a deposit. Our Generation Home Agreement turns “deposit gifters” into “deposit boosters” via an interest-free loan; removing those awkward conversations about financial agreements and getting more young people on the ladder that much faster – with everyone secure in the knowledge they are protected.”