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Bank of Mum and Dad will drive housing market recovery

The Bank of Mum and Dad will be a key driving force behind the post-coronavirus recovery within the UK housing market, according to new analysis.

Nearly one in four housing transactions – 23 per cent – will be supported by the Bank of Mum and Dad (BoMaD), a four per cent rise since 2019, according to new research by Legal and General.

And 24 per cent of borrowers are now more reliant on financial support from family due to the pandemic.

The amount the BoMaD will lend this year is almost half of the total of 2019 as the housing market effectively locked down during the peak of the pandemic.

Families will lend £3.5bn to loved ones this year, compared to £6.3bn a year earlier, which will fund 85,000 fewer home purchases.

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Of those who have recently bought a house and received support from loved ones, 65 per cent said it would have been “unlikely” without the BoMaD. L&G’s analysis shows the BoMaD will be even more generous than usual this year, lending on average £20,000 towards deposits.

Homebuyers in London are set to receive the most, with the average BoMaD “loan” standing at £25,800.

“While the Bank of Mum and Dad is leaning in to help those lucky enough to have its backing, a generation of hopeful buyers without the support of BoMaD could find themselves locked out of the housing market”, said Nigel Wilson, L&G chief executive.

The government reopened the UK housing market on 13 May after lockdown, and has since announced a stamp duty holiday to reignite the housing market.

While there was a collapse in purchases in the first half of the year, L&G’s analysis shows the BoMaD will be involved in 175,000 housing transactions with an estimated transaction value of £50.3bn.

Wilson added: “Whilst the generosity of the Bank of Mum and Dad is undoubtedly helping hundreds of thousands of loved ones to realise their homeownership goals every year, it remains a symptom of our broken housing market.”

“Our reliance on BoMaD is unfair and unsustainable, and it’s putting retirements at risk as parents and grandparents try to help their kids to have a similar standard of living as they enjoyed.”

By Angharad Carrick

Source: City AM

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Home moving and mortgage businesses set out blueprint for market recovery

Landmark Information Group, Mortgage Advice Bureau and Simplify have written to Secretary of State for Housing, Communities and Local Government Robert Jenrick, to detail how government can help stimulate housing market recovery following the COVID-19 crisis.

The three businesses are seeking to support customers and protect jobs across the industry.

The group’s proposals include:

  • Defining a ‘safe move’ and ensuring that the sector be one of the first to reopen during the phasing out of stay at home measures;
  • Ensuring that those who were part way through transactions are protected by lenders continuing, where feasible, to honour mortgage offers;
  • Ensuring the Job Retention Scheme (JRS) is extended for businesses operating in the home moving process beyond the restart of the market, to allow firms to rebuild income.

The group has been working with government and other businesses across the industry to ensure practical proposals are developed that will allow the market to restart as soon as possible.

To give consumers confidence, the group said that Public Health England’s endorsement of these proposals four market recovery will be essential.

Simon Brown, chief executive of Landmark Information Group, said: “We share government’s view that it is critical this crisis is a short, sharp shock to the economy rather than an extended depression.

“However, we are concerned that without a plan the housing market and home movers will experience the same uncertainty that followed the financial crisis.

“Protecting the housing market at this crucial time will help grow the UK economy and avoid a costly downward spiral.

“We know that government is also keen to achieve this, and our priority is to work with them to ensure the right short and medium-term decisions are taken.”

Ben Thompson, deputy chief executive of Mortgage Advice Bureau, said: “Our businesses play a vital role in the home moving process.

“As a group we are market leaders in the provision of mortgage advice, surveys and conveyancing.

“We believe that we have a responsibility to join others who are campaigning on this and taking the lead in supporting the recovery of the wider sector at this critical time.

“We need a truly joined-up approach that recognises that all those working across our sector must be able to operate again, co-ordinating seamlessly, in order for the market to recover.”

David Grossman, chief executive at Simplify, added: “Our focus is on ensuring that we are able to support the home moving process to restart in a way that is safe.

“We recognise that the government rightly took strong and decisive action to effectively pause the UK home moving market.

“At the appropriate time it is critical that there is equally clear guidance to consumers and industry to allow the market to restart and to recover.

“Our priority is to work with government and others in the industry to establish this.

“While we know there are economic consequences from a dysfunctional housing market there are also significant social implications, making it essential that the market recovers as quickly as possible.”

By Jessica Bird

Source: Mortgage Introducer