Parents forced to hand over inheritances early to help children buy a home

Ms McDonald said: “First-time buyers are finding it more difficult to get on the property ladder, so those who have the option will be increasingly turning to family for additional support.

“Help with a bigger deposit will open up greater mortgage choice and also help to secure a lower interest rate.”

The average house price rose by £51,000 in the two years to October 2022, reaching a record high of £296,000, according to official data from the Office for National Statistics.

Soaring prices hammered affordability just as rising interest rates made borrowing costs more expensive. The average two-year fixed-rate mortgage for a borrower with a 5pc deposit has more than doubled in the past year, rising from 3.06pc in January 2022 to 6.13pc at the beginning of this month.

The typical two-year fix for a borrower with a 10pc deposit climbed from 2.55pc to 5.89pc in the same period, according to analyst Moneyfacts. A borrower with a £150,000 loan would need to find an additional £417 a month to afford the difference in rates.

The fallout means first-time buyers must either reduce their budget, save for longer or seek financial help elsewhere.

Gary Boakes, of broker Verve Financial, said: “It has been rare not to meet first-time buyers who were not having help from family last year, especially Mum and Dad, with support ranging from £5,000 to £120,000.”

It coincides with the end of the Help to Buy equity loan scheme, which closed to final applications in October last year and will come to an end after March. The Government scheme supported around 40,000 first-time buyer purchases a year.

#Parents #forced #hand #inheritances #early #children #buy #home

Leave a Comment