It is often the lender most turn to for cash when all else fails.
But now it seems even the bank of mum and dad is no longer a guaranteed insurance policy.
For parents are now calling in their loans and telling their children ‘we want it back’.
Parents across the UK handed out just under £10bn to their children in 2023-24.
That represents a rise of 18 per cent compared with the previous year, when mums and gave their offspring around £8.5bn, and a staggering 67 per cent rise from 2020, when the annual figure was £6bn.
Experts at Rathbones – which deals with investment management and financial planning – said, however, it was seeing mums and dads start to ‘re-think’ cash donations to their kids.
In a study of 100 parents aged 60 and above who have already given a ‘substantial sum’ to their children – for a deposit on a house, new car, university fees, or help raising a child – it found that 16 per cent now expect the cash back.
A further 8 per cent said they would expect their children to pay for any care needs they had in the future.
Parents across the UK handed out just under £10bn to their children in 2023-24.
That represents a rise of 18 per cent compared with the previous year, when mums and gave their offspring around £8.5bn, and a staggering 67 per cent rise from 2020, when the annual figure was £6bn
Around one-in-five first home purchases are made with a substantial deposit from the buyer’s parents, with the average deposit being around 20 per cent of the total purchase price.
With the average first home in the UK selling for £230,000, that means a deposit of £46,000 is needed.
Just ten years ago, the average cost of a first home was £140,000, with a deposit usually accounting for 15 per cent of the total purchase price (rather than the 20 per cent today), which meant a deposit of £21,000.
That is a whopping £25,000 more needed for a deposit now.
The huge sums involved mean that some mums and dads are at ‘breaking point’ after misjudging how much they needed for themselves – and even their own parents – in later life.
This has resulted in 16 per cent saying that despite the ‘loans’ initially being considered ‘gifts’, they actually did ‘need’ the money back, some much sooner than expected.
Around one-in-five first home purchases are made with a substantial deposit from the buyer’s parents, with the average deposit being around 20 per cent of the total purchase price
Among the reasons why parents are seeking a return of the ‘loan’ include underestimating the cost of their own care – or that of their own parents – dwindling interest rates, and a surge in the cost of living.
Over-estimating your pension payments or expecting a larger sum from the maturity of various investment policies also put a spanner in the works for some.
A spokesman for Rathbones said this week that 2024/25 would see parents started asking for the cash back.
He said: ‘Our study has found that the Bank of Mum and Dad has started to call in its debts.
‘A total of 16 per cent of over-60s say they will likely need to rely on payments they have already given to their children to pay for their unexpected later life costs.
‘A total of 8 per cent said they would expect their children to pay for any care needs they may have in the future.’
