Bank of Mum & Dad still lending

Half of first-time buyers under 30 are getting help from their parents to buy.

Data from the Council of Mortgage Lenders show as lenders have lowered their loan-to-value ratios on mortgages – the amount that can be borrowed against the value of a home – parents have stepped in to fill the gap.

However, first-time buyers are not taking advantage of falling house prices.

The CML data show the value of a property bought by an 'assisted buy' was £146,000 in the second quarter of 2008 – compared to £145,000 a year ago.

However, parents are being tapped for more cash as higher deposits are needed.

The average deposit now is £35,000, compared to £29,201 a year ago, as average LTVs on mortgages have dropped from 80.6 per cent to 75.3 per cent for buyers receiving help.

The average income of £29,000 is also unchanged.

Meanwhile, those buying without help had an average income of £36,000, but were buying properties worth £125,000 – both this year and last year.

In 2008 unaided buyers were putting down deposits of £7,500 and taking 94.9 per cent loan-to-value deals.

A major difference between those helped – so having a much larger deposit – and those with not help was the interest rate their were paying.

The higher LTV deals for unassisted buyers were on average 6.12 per cent, compared to 5.79 per cent for those getting help.

"In essence, those who are fortunate enough still to be able to call on parents or others for help have been able to reduce their risk profile – borrowing less relative to the property’s value and their income – while those who cannot remain as stretched as they were before the onset of the credit crunch," the CML said.

Meanwhile, research by market research company BDRC shows 40 per cent of homeowners over 45 have offered financial assistance to help their children get onto the housing ladder.

The research also showed over half of potential first-time buyers – those planning to buy in the next two years - are not currently saving for a deposit.

Mark Long, BDRC client services director, said: "Clearly many potential first-time buyers are simply not making adequate financial plans to be in a position to afford a home – either because they can't afford to, or because they don't care to.

"The current turmoil in the financial markets suggests that the Bank of Mum and Dad may not be in a position to offer help in the future.

"This could have a significant impact on any recovery in the housing market."

The CML also sees the coming recession and falling house prices closing the counters at the Bank of Mum and Dad

The CML stated: "We could see less parental help for first-time buyers from the Bank of Mum and Dad.

"Parents seeing falls in the value of their own home – and the equity they hold in it – may be less willing or able to help their children with a deposit."