According to the latest news from the Council of Mortgage Lenders, some 64% of first time buyers now rely on the bank of Mum and Dad in order to get their foot on the first rung of the property ladder.
This is close to double the level seen in 2007 before the credit crunch struck, when between 30 and 40% of first time buyers would tap parents for assistance to buy their first home. Now, according to the CML almost 25% of second-steppers are requiring some assistance from the bank of Mum and Dad as well.
This shows just how hard it is for first time buyers in the current climate, as they are faced with demands for bigger deposits compared to the easy money that was being thrown at them during the boom. Of course now they also have rising rents to contend with as well. The CML added that parents were reaching the limits of what they could do to help, potentially blocking an even larger proportion of younger buyers from owning a home.
"We estimate that last year only 36pc of first-time buyers got on to the housing ladder under their own steam. This contrasts with well over 60pc before the credit crunch, when deposit requirements were more modest," the CML said.
It added that "this problem of insufficient savings for a deposit is by no means limited just to first-time buyers", as 26pc of existing home-owners also claimed "they were likely to need help from family or friends", the survey found. "This provides clear evidence that second steppers and others also face challenging affordability hurdles," the CML said.
The findings followed official figures showing that 4.7m retired householders own outright properties worth £770bn, an average of £164,000 each. However, they are struggling to release funds for children.
"The fact that an increased reliance on the Bank of Mum and Dad over recent years has gone hand in hand with sharply reduced numbers illustrates that there are material limits to how much parental help can deliver, both in terms of how many parents are in a position where they can offer help and the depth of their pockets," the CML said.
The Government's controversial Help to Buy subsidised mortgage could help to "ease some of the pressures on the Bank of Mum and Dad... and enable more households to get on to the housing ladder under their own steam," the CML said.
According to a recent YouGov survey of 8,183 adults, the number of first time buyers recovered to 218,000 last year. This is the best performance seen since 2007 when 359,900 first time buyers got a mortgage and bought their first home. However, it was "barely half of what might be considered a more normal level of activity".
- Friday 07 June 2013