Following the impact of the coronavirus pandemic, many mortgage lenders are asking for evidence from first-time buyers (FTBs) that the majority of their deposit comes from their own savings, possibly signalling the end of the Bank of Mum and Dad.
Nationwide, one of the UK’s largest mortgage lenders, is now asking FTBs to prove that at least 75 per cent of their deposit comes from their savings.
The news follows Nationwide announcing that customers would need to provide at least a 15 per cent deposit to secure a mortgage, as it moved away from five and 10 per cent deposit mortgages.
According to industry research, approximately 40 per cent of FTBs who had a mortgage approval in 2019 had some financial assistance from their family, with lending from the Bank of Mum and Dad totalling £5 billion last year.
The average parental contribution for homebuyers in 2019 was £24,100, which increased by more than £6,000 on the previous year’s figure, and made the Bank of Mum and Dad the 10th biggest mortgage lender in the UK.
Financial support from family members has allowed many first-time buyers to make their first step onto the property ladder in recent years, and while other lenders have not yet followed Nationwide’s opposition to the Bank of Mum and Dad, experts expect similar requirements to be put in place in the coming months.
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