With the average age of a First Time Buyer in London creeping towards 40, the Bank of Mum and Dad is needed now more than ever.
This probably comes as a shock to the baby boomer generation wondering why their children seem to have Peter Pan syndrome and leaving big life decisions, such as buying home ownership in London and having children to later on in life.
The media has shown that home ownership is at its lowest levels in a generation, and things are only going to get worse. Years of house price increases have significantly outpaced rises in wages, making property less and less affordable.
This comes after property portal Rightmove’s recent house price index, found that house prices most often bought by First-Time Buyers (2 bedroom properties) have risen far more quickly than larger homes.
However, it’s not all bad news – Rightmove said the number of two bedrooms or fewer homes on the market is up by 1.9 per cent, compared to a year ago, providing a window of opportunity for First Time Buyers in the first quarter of 2017.
As a property finder focussed on areas of London – popular amongst people in their 30’s – such as; Battersea, Clapham, Wandsworth, Putney and Fulham, competition for 2 bedroom apartments is rife. The papers are reporting a slowdown in the London housing market, but we are witnessing 2 bedroom apartments being snapped up quickly by these types of buyers – and their parents.
With low or no interest rates, long or infinite repayment periods and a personal service, it’s no wonder the Bank of Mum and Dad is fast becoming Britain’s best-loved financial institution.
But if parents can help they should
With the majority taking a mortgage for a term of 25 years or more, this delay is likely to have a significant impact on people being able to pay their mortgage off before reaching retirement and although the Bank of England may have kept interest rates unchanged at 0.25% this month, average mortgage rates are creeping up, albeit slowly.
With competition fierce for 2 bedroom apartments, in popular lively areas close to good transport links, it is essential that a mortgage is in place and a solicitor instructed before starting the property search. This will put you in good stead so that you are seen as an attractive buyer to a vendor and selling agent. Therefore, the need for the Bank of Mum and Dad to assist in a deposit for a First Time Buyer is pertinent now more than ever.
Beneficiaries of the increase in the value of their homes, with good pensions and significant savings, many are in a strong position to help.
We’ve come across some parents who are helping their children to buy 2 bedroom apartments; taking the rent from the second bedroom as payment back for the loan; so it may end up being a short term loan or shared ownership rather than a gift.