Deposits for first-time buyer mortgages - from the 'bank of mum and dad'

Many deposits for first-time buyer mortgages are being provided by the 'bank of mum and dad'. New figures show that nearly 66 per cent of first-time buyers receive financial help to get on the property ladder.

The Council of Mortgage Lenders has said that the number of first-time buyers taking on mortgages in the UK has plummeted compared with pre-financial crisis levels. There are now around 200,000 first-time buyer purchases a year, a far lower figure than the 500,000 a year recorded before the credit crisis.

The Legal & General has said that the mortgage industry and government must do more to support the 'Bank of Mum and Dad', as parents are increasingly overstretched and far too heavily relied upon to provide financial assistance to first-time buyers.

Ben Thompson, managing director of the Legal & General Mortgage Club, warned that the Bank of Mum and Dad was "unsustainable" and could soon reach breaking point. He added that: "Such a consistent level of ‘lending' is not sustainable, especially when you consider the ageing population and the generally poor provision of retirement saving in this country. In many ways, these parents are robbing Peter to pay Paul and as the financial strain increases on all of us it may not be too long before the Bank of Mum and Dad reaches its breaking point, leaving not only a huge gap in retirement provision, but an already depressed first-time buyer sector even more in the mire."

The government, in an attempt to help first-time buyers, has announced the return of the 95 per cent mortgages. The move is being seen as a real boost for the housing market. Specifically designed for new build homes, 95 per cent mortgages will be offered by all the leading lenders and are to be priced competitively.