Parents must give up inheritances early to help children get a home

0
5

Ms McDonald said: “Starters are finding it more difficult to get up the property ladder, so those who have the opportunity will increasingly turn to family for extra support.

“Assistance with a larger down payment allows for more mortgage choice and also helps you get a lower interest rate.”

The median house price rose by £51,000 in the two years to October 2022, reaching an all-time high of £296,000, according to official data from the Office for National Statistics.

ALSO READ  Luke Cowan-Dickie's injury shines through victory in Exeter

Rising 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 5 percent down payment more than doubled in the past year, from 3.06 percent in January 2022 to 6.13 percent at the start of this month.

According to analyst Moneyfacts, the typical two-year fix for a borrower with a 10 percent down payment rose from 2.55 percent to 5.89 percent during the same period. A borrower with a £150,000 loan would need to find an extra £417 per month to pay the rate difference.

ALSO READ  Chandler Cunningham-South gives Steve Borthwick a glimpse into the future with a cheeky display

The consequences mean that first-time buyers must either lower their budgets, save longer or seek financial help elsewhere.

Gary Boakes, from estate agent Verve Financial, said: “It’s rare to meet new buyers who had no 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 stock lending scheme, which closed for final applications in October last year and will end after March. The government scheme supported about 40,000 purchases by new buyers each year.

ALSO READ  Ukrainian soldiers play football game on the battlefield as the war continues