Low or no interest rates, long or infinite repayment periods and a personal service - it’s not surprising that some say the Bank of Mum and Dad is Britain’s best-loved financial institution. But it’s a little more surprising what a major player it is in the UK housing market, says Robin Hall managing director of Newport-based financial planning business Kymin.

Recent findings from the Centre for Economics & Business Research (Cebr) showed that, in 2016, home buyers received £5bn of help from families’ and friends. This is equivalent to the annual lending of a top-ten mortgage business. That’s driven by both demand and supply.

On the one hand, years of house price increases have significantly outpaced rises in wages, particularly since the financial crisis, making property less and less affordable.

Home ownership is at its lowest level in a generation, and things are only going to get worse. In 2015, the house price-to-income ratio was at its widest since the financial crisis and Cebr forecasts that it will pass its 2007 peak this year. For many aspiring homeowners, it is impossible to buy without help from family and friends.

On the other hand, recent decades have been much kinder to the ‘Baby Boomers’ who now control the lion’s share of the nation’s wealth. Beneficiaries of the increase in the value of their homes and with good pensions and significant savings, many are in a strong position to help.

In 2016, Bank of Mum and Dad helped 306,000 of their loved ones buy a home giving an average of £17,500 to each to fund the purchase of £77bn worth of property. In most cases (57 per cent) the money is simply a gift, while for some cases it’s a no-interest loan (18.3 per cent), and occasionally a loan with interest (4.8 per cent), a combination or other form of help.

This equated to 25 per cent of all mortgage transactions in 2016. A quarter of all home owners, 32 per cent in London, and 57 per cent of the under 35s received help from friends and family to buy the home they live in. That proportion will grow in future: A third of all prospective home owners say they will get help when they buy.

As prices rise, wages trail and affordability worsens in coming years, an increasing number of house buyers across the country will rely on friends and family to plug the gap.

Housing affordability varies starkly by region. The Office of National Statistics figures show a six-fold difference in affordability between the least and most expensive areas of England and Wales, based on median house prices against median earnings locally.

The pace of house price increases, however, threatens to stretch family finances to breaking point. In 2016, the average family contribution towards a loved one’s home was 37 per cent of an average household’s net financial wealth, excluding property wealth. By 2035, it is predicted it will be more than half. For those buying in London, it already is, and the South East and East of England will follow soon.

There are opportunities for The Bank of Mum and Dad to expand. Releasing equity among the over 55s who already own their home is, at present, barely used. Even that represents a vast source of wealth, though, which could help house 413,000 more families. Lifetime mortgages could be a solution for many families looking to unlock their accumulated property wealth without having to move home. Things are even worse for those families living elsewhere who try to finance their children buying in the capital or other property hot spots.

The Bank of Mum and Dad is not adequate in that it fails to address the needs of those without parental wealth, who will nevertheless rightly expect a realistic prospect of being able to buy their own home too.

It will put pressure on those who can help, making it more difficult to plan for the uncertainties of retirement and old age.

The situation is not sustainable, with continued increases in the cost of housing already putting property in many parts of the UK beyond the reach of all but those from the wealthiest families, especially in London and the South-East.

House prices will only return to sensible levels relative to wages when we see a revolution in supply, as the UK has the ongoing problem of too few houses. Until the problem of supply is addressed, the Bank of Mum and Dad will never be short of customers, but it could, sooner rather than later find itself short of funds.

Fundamentally, for all their generosity, research shows that families and friends cannot solve the UK housing crisis caused by too few homes. It’s not fair on those without wealthy families, and it’s not sustainable in the future.

But this is just one part of the jigsaw. There needs to be a joined-up strategy to deal with the housing crisis and it is needed before the Bank of Mum and Dad’s reserves run out.

Call Kymin on 01633 840000 or call in at 35 Bridge Street, Newport, NP20 4BH. www.kymin.co.uk