If you’re a parent then today’s housing news may come as little surprise: the ‘bank of mum and dad’ is now the equivalent of a top ten mortgage lender in the UK.
Research by Legal & General and the Centre for Economics and Business Research has found that parents helping their children on to the property ladder have become such a crucial part of the housing market that they will be involved in a quarter of all property transactions this year.
Rising house prices, years without real-terms wage rises, a shortage of supply and tougher mortgage regulations since the financial crisis have made it difficult for first-time buyers to get on the ladder. So family members have stepped in. Parents give their children around £17,500 on average to help get them on the property ladder, adding up to a staggering £5 billion per year.
Louisa Fletcher, a property expert, told the BBC: ‘We’re looking at house prices in many areas back to post-crisis highs, and realistically I think that’s only going to continue, so I can only see the bank of mum and dad probably growing in stature as one of the biggest lenders.’
The Telegraph reports that self-driving cars threaten a ‘seismic’ change to the multi-billion pound motor insurance industry, with the number of accidents on the roads plummeting as computers take the wheel. Research for a motor industry conference predicts an 80 per cent drop in crashes over the next 20 years thanks to so-called ‘autonomous vehicles’. Drivers in Britain pay £14.2 billion a year in motoring premiums – representing more than 40 per cent of all non-life premiums – and fewer accidents on the roads mean this massive industry faces huge disruption.
Meanwhile, a think tank says that the government’s flagship benefit reform has ‘serious design flaws’ that must be resolved before it is expanded across the country. The Resolution Foundation said Universal Credit had been taken too far from its original purpose and ‘veered off track’ because of cost-cutting. It comes as the government announces a further expansion of the scheme.
Welfare Secretary Stephen Crabb said the payment was ‘transforming welfare’ and getting people into work faster. Universal Credit, championed by Crabb’s predecessor Iain Duncan Smith, aims to provide incentives for people to move off benefits and into work.
According to the BBC, the gap between the lifespans of rich and poor people in England and Wales is rising for the first time since the 1870s. Everyone is living longer but rich people’s lives are extending faster, the City University London study says. Better life expectancy narrowed the gap in the early 20th Century but this trend reversed for men in the 1990s. Author Professor Les Mayhew from Cass Business School said the difference was mainly due to ‘lifestyle choices’.
Finally, Britain’s economy looks set to slow further after a collapse in confidence among business, according to a new report. The economy is on course to grow by just 0.3 per cent in the second quarter of the year following expansion of 0.4 per cent in the first quarter and 0.6 per cent in the final quarter of 2015. The figures come from the Institute of Chartered Accountants in England and Wales.
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