Bank of Granny and Grandad open for business as more home buyers rely on older generation for help
Significant number (32%) of 18-34 year olds had financial help from grandparents to get on the property ladder¹
Nearly one-in-four prospective buyers expect help from their grandparents¹³.
Trussle’s research identifies growing trend of assistance with just 3% of over 55s previously receiving help from relatives to buy a home²
London, 23rd October: Nearly a third (32%) of homeowners, aged between 18 and 34, were given financial help by their grandparents to buy a property1 – compared to just 3% of over-55s² who previously had the same assistance - according to new research by online mortgage broker, Trussle.
The scale of the growing ‘Bank of Granny & Grandad’ could be explained by rapidly growing house price to income ratios. In 1999, average house prices stood at £80,443 - just 4.5 times the average annual salary of £17,803. Today, average house prices are £234,853 - 7.9 times the average annual salary of £29,558³. Yet today, most mortgage lenders will lend applicants four to five times their household income.
Trussle’s study looks at 2,000 current and aspiring homeowners across the UK. Overall, 12% of existing homeowners received financial assistance from their grandparents⁴. London leads the way with over a quarter (26%) of homeowners being helped⁵, compared to just 4% of those in Scotland⁶, which is at the bottom of the list. This is perhaps unsurprising, considering the average house price in London currently stands at £473,000 – three times Scotland’s average of £155,000⁷.
According to the research, homeowners were typically 25 years old when they received financial support from their grandparents⁸. The amount of financial help received is, on average, over £7,400⁹. Using official house price data, this equates to 30% of a typical 10% deposit worth £23,485¹⁰. When asked why they received assistance, the majority (63%) said they would either not be able to afford the deposit without help or that their grandparents simply had access to spare money¹¹.
However, those who didn’t receive help from the ‘Bank of Granny & Grandad’ but did get financial support from friends or other family members admitted they were likely to get more money, with the average amount being just over £16,000¹².
Looking at prospective homeowners, the ‘Bank of Granny & Grandad’ looks set to continue supporting first-time buyers, and even grow. Nearly a quarter (23%) of would-be buyers are expecting a financial handout from their grandparents¹³. This compares to just 12% of existing homeowners who’ve had assistance⁴.
Prospective homeowners expect to wait until they’re 34 years old before their grandparents help them get on the ladder¹⁴. On average, this group expects to receive £5,200 worth of support¹⁵.
When it comes to repayments, 23% of prospective homeowners expecting financial assistance don’t expect to ever reimburse their grandparents¹⁶. This is compared to 28% of homeowners who’ve already received the help and don’t expect to ever repay it¹⁷.
Dilpreet Bhagrath, Mortgage Expert at Trussle said: “Saving for a house deposit can be extremely difficult given that the average house price is now nearly eight times income³. This can be even harder for those who are renting at the same time – so financial support from family members is often essential to get on the property ladder.
The research underlines the generosity being shown by grandparents across the UK as they help the younger generation get onto the property ladder.
But, clearly not everyone can rely on financial help from family and friends. There are a range of affordable schemes to help first-time buyers, such as the Help To Buy Equity Loan and Shared Ownership. However, more must be done to improve access to the housing market and this is where both Government and the industry needs to step up and consider innovative new approaches.
At Trussle we’re using our data to help design products that will enable more people to get on the property ladder and make mortgages more accessible.”
– ENDS –
Notes to editors
For further information, please contact:
Katie Halfhead at Trussle: [email protected] / 020 3884 0368
Rupert Bhatia or Jess Riley at Teamspirit for Trussle: [email protected] / 020 7861 3827
We’ve taken extra care to ensure the information provided within this release is presented in a way that’s compliant with regulatory requirements. If you have any questions about how to repurpose this information or require any further assistance, please contact Katie Halfhead at Trussle.
Trussle commissioned a nationally representative UK survey with research agency, Censuswide in October 2019.
1. Calculation: 188 homeowner respondents were aged between 18 and 34When asked, ``Did you receive financial assistance from any of your grandparents to buy your home?’ - 61 responded ‘Yes’61 = 32% of 188
2. Calculation: 432 homeowner respondents were aged over 55When asked, ``Did you receive financial assistance from any of your grandparents to buy your home?’ - 13 responded ‘Yes’13 = 3% of 432
1999 salary data: https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/earningsandworkinghours/bulletins/annualsurveyofhoursandearnings/2016provisionalresults (Figure 3, downloadable XLS data)
£80,443 / £17,803 = 4.5 times£234,853 / £29,588 = 7.9 times
4. Calculation: 1000 homeowner respondents were asked ``Did you receive financial assistance from any of your grandparents to buy your home?’ - 123 responded ‘Yes’123 = 12% of 1000
5. Calculation: 93 homeowner respondents live in Greater London
Of these 24 responded ‘Yes’ when asked, ‘Did you receive financial assistance from any of your grandparents to buy your home?’
24 = 26% of 93
6. Calculation: 89 homeowner respondents live in Scotland
Of these 4 responded ‘Yes’ when asked, ‘Did you receive financial assistance from any of your grandparents to buy your home?’
4 = 4% of 89
7. Source: https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/housepriceindex/august2019 Section 4 & Section 5
8. 123 homeowner respondents answered a mean average of 25.15 when asked: ‘How old were you when you received financial assistance from your grandparents to buy your home’
9. 123 homeowner respondents answered a mean average of £7,437 when asked: ‘Approximately how much financial assistance did you receive from your grandparents to buy your home’
Current average UK home worth £234,853. Source: http://landregistry.data.gov.uk/app/ukhpi/browse?from=1999-08-01&location=http%3A%2F%2Flandregistry.data.gov.uk%2Fid%2Fregion%2Funited-kingdom&to=2019-10-01
Typical 10% deposit of £234,853 = £23,485
£7,437 = 31% of £23,500.
11. Calculation:123 homeowner respondents were asked ``What is the main reason you received help from your grandparents (tick one)
42 ticked ‘My grandparents have/had spare money
36 ticked ‘I couldn’t afford the deposit without them’
78 / 123 respondents = 63%
12. 153 homeowner respondents who did not receive financial assistance from their grandparents to buy their home, but received financial assistance from another family member of friend gave a mean response of £16,116 when asked: ‘Approximately how much financial assistance did you receive from them’
13. Calculation: 234 prospective homeowner respondents answered yes to ‘When it comes to buying a home in the future, do you expect to receive help from any of your grandparents?’
234 = 23% of 1000
14. 234 prospective homeowner respondents answered a mean average of 34.2 when asked: ‘How old do you expect to be when you buy a home with your grandparents help?’
15. 234 prospective homeowner respondents answered a mean average of £5,228 when asked: ‘How much financial help do you expect to receive from your grandparents?’
16. Of the 234 prospective homeowner respondents who expect to receive financial help from their grandparents when buying a home in the future, 54 stated, ‘I don’t expect to ever pay back the financial assistance.’
54 = 23% of 234
17. Of the 123 homeowner respondents who have received financial help from their grandparents when they bought a home, 35 stated, ‘I don’t expect to ever pay back the financial assistance.’
35 = 28% of 123
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