Personal Finance

The Bank of Mum and Dad has turned me into a Mrs Bennet


Ladies, I’m sorry to ask, but when was the last time you bought the chap in your life a pair of new underpants?

Yes, I’m aware that sounds sexist, but two thirds of men rely on their mothers, wives and girlfriends (nobody admits to sisters, which would just be icky) to furnish them with snazzy boxers and hipster trunks.

And, according to Alan Greenspan, former US Federal Reserve board chairman six times over, as far as economic forecasting is concerned, men’s smalls are a big deal.

When there’s a squeeze on the home front (stop it, missus…), your son’s box-fresh Calvins or partner’s M&S David Gandies are the first to go for a Burton in the household budget.

Right now, such cost-cutting stands to reason, what with the increased outlay on reusable masks and elaborate eyebrow grooming that extends far beyond threading. (Did you know you can get them gelled? Highlighted? Laminated?)

In a pandemic where women cover their faces, the good old Lipstick Index is no longer a useful measure of national mood. So now it’s all about a watching brief on men’s Y-fronts.

When people aren't buying David Gandy's fancy pants then you know we're in trouble

Credit: Marks & Spencer/REX Shutterstock

Now, I’m no Christine Lagarde – and not just because she wouldn’t be caught dead in an ancient Uniqlo hoodie and a pair of sliders – but there’s more than a spot of emergency fiscal tightening going on.

In short: the chill winds of recession are blowing through the Bank of Mum and Dad, which the London School of Economics has calculated is the sixth biggest bank in the country.

In 2018, BOMAD paid out about £6 billion to help first-time buyers invest in a home, figures from Legal and General show. One in four transactions relied on Mum and Dad’s money, with their contribution ranging from an average of £11,000 in Scotland to £31,000 in London.

Before a cry of “jammy sods!” goes up, let it be pointed out that more than a fifth of parents and grandparents had to dip into their pension pot – half into their life savings – to come up with the moolah, leaving themselves at real risk of poverty in retirement.

And now new research from Saga’s equity release scheme has revealed that parents are still paying out well into their children’s adulthood.

A fifth have accelerated their handouts this year; 21 per cent of those aged above 50 with children over the age of 18 have increased the level of financial support to their offspring.

The study doesn’t mention if it was done willingly, but as there’s a reference to “older people with substantial assets and incomes” helping out relatives, I’m assuming it was all reasonably good-natured.

I’m also assuming they must be more stacked than a triple cheeseburger. Now, I’m not poor. I even thought I was rich until I had children, a mortgage and the job of buying everyone’s underpinnings.

My two, aged 18 and 11, weren’t educated privately because I wanted to squander all our (purely theoretical) spare cash on holidays in St Kitts and skiing in Gstaad. Oops, I mean, rented cottages in Scotland and surf lessons in Pembrokeshire.

I do have one substantial asset, but my husband and I happen to be living in it and hope to continue to do so for a really long time, until Barclays wants it back, or force majeure fills the basement with gold doubloons.

Would I like to help my daughters with their first properties? Absolutely. But Boris Johnson’s announcement that a new five per cent deposit scheme will transform Generation Rent into Generation Buy takes no account of rocketing house prices.

In August, Nationwide put a limit on deposits from BOMAD, with its controversial new policy stating that borrowers looking to get a mortgage that will cover 90 per cent of the cost of their home must prove that no more than a quarter of their deposit was gifted to them. Talk about mixed signals.

Lending money to family carries its own pitfalls; last year it emerged that there had been a spike in parents taking their children to court over unpaid property loans, with three times as many cases in 2019 than in 2016. So what if finding a spare £62,000 to give my kids a leg-up is but a pipe dream? Other parents in the squeezed middle have had it much tougher in 2020.

I have watched friends’ adult children come back to the nest as they were furloughed, made redundant, or were just so unwell and vulnerable they desperately needed Mum and Dad, regardless of cash withdrawal facilities.

Teenagers who had their gap year travel thrown into disarray have no prospect of picking up casual work in the hospitality industry. All must be fed and watered. Grandchildren must be cared for while Mum and Dad wrestle for space at the kitchen table.

Experts have also revealed that due to Covid-19 hitting the self-employed, limited company directors and those running small businesses, BOMAD – that most caring of institutions – has found itself embroiled in the bail-out business. Unfortunately, that can be far more complex that it initially seems.

That’s why I’m mulling over a more traditional approach. You know how it is a truth universally acknowledged that a single man in possession of a good fortune must be in want of a wife?

As I see it, the only way I can safeguard my girls’ financial future is to do a Mrs Bennet and ensure they marry well. No rush. I’m just putting it out there; I’ll even start saving to get the first celebratory round of underpants in.

In the meantime, I would caution the selfless Bank of Mum and Dad to get its house in order. Lending without regard to the future, however generous, is a dangerous strategy for everyone.

Young people may feel anguished right now, but bring the Bank of Mum and Dad to its knees and a generation will end up with its knickers in a twist.


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