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juvenal

The Bank Of Mum And Dad Is Closing...

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The Bank of Mum and Dad..

Is it a prospering institution, or one under growing pressure from a dozen directions?

I argue that the Bank is failing, and may soon almost cease trading, for the following reasons:

As we all know, Mum and Dad have, in so many cases, used their houses as cash machines. MEWing during HPI, which means paying back during HPC.

Mum and Dad have already funded or subsidised Uni tuition fees and living expenses for their offspring. Or are doing so right now.

Mum and Dad’s jobs have never been more insecure. Whatever their employment level. Long term employees are expensive to any firm, and thus are targets to be made redundant, or offered severance.

Under Boardroom level, the higher your salary is, the less likely you are to be offered the chance to stay on at 65. You are expensive, and replaceable with a cheaper model. And you have no legal right whatever to stay.

Mum and Dad know future wage settlements in most sectors will be smaller and harder to negotiate.

They know both income tax and interest rates are going to rise, whichever government is in power.

Mum and Dad’s savings have been hammered. Annual interest earnings have typically almost halved, as many STR’s know only too well.

Mum and Dad’s pension pots (nearly all pensions are equity related) have been battered. Anything between 10% - 40% down on any given pension plan

Some employees will see their actual pension contract alter adversely over the next couple of years. Pension schemes are changing conditions for existing members, as well as new ones.

If Dad’s approaching retirement, he knows annuity rates are falling.

Mum and Dad’s house is worth considerably less. If they have a second home, the perceived ‘hit ‘ is doubly evident to them.

Living costs are rising. Everyone accepts the real cost of living is up 10% on last year.

Both old age care home fees (and insurances against this eventuality) rise annually.

The size of mortgage deposits that parents originally envisaged being able to make for their kids, now need revising upwards drastically. We are no longer in five grand deposit territory, and won’t be for long while.

All the above mean that parental plans conceived years back to gift house or flat deposits to the children will increasingly be shelved.

I conclude by saying that the very wealthy (as ever) will be unaffected. I think this Spring has seen them in action, buying starter properties for their offspring, and providing a significant tranche of the very few mortgages actually taken out. But their numbers are decreasing.

By winter I contend that the Bank of middle class Mum and Dad will no longer be a significant factor in house purchases.

The Bank no longer has confidence in the future, or the underlying assets to gift money.

That's the way I see it.

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Living costs are rising. Everyone accepts the real cost of living is up 10% on last year.

Even those who have had their mortgage costs cut?

... & paid for by me & other silly savers

I ditched Sterling on principle.

I wish more had.

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Even those who have had their mortgage costs cut?... & paid for by me & other silly savers

I ditched Sterling on principle.

I wish more had.

I missed that one. But that one ray of light for BMM won't last long.

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Mum and Dad’s pension pots (nearly all pensions are equity related) have been battered. Anything between 10% - 40% down on any given pension plan

That is only part of it, take into account annuity rates as well thanks to near zirp policy and quantitative shitting.

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Guest KingCharles1st

Its sad that BOMAD don't really understand the forces under which their offspring will have to operate- in many, if not most cases, they have little idea at all of the real world having set store and faith in everything 1960's and 1970's...

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BOMAD will be under sever pressure to keep up if unemployment rises as much as I think it will. It won't be concerned with house prices...rather food on plates for their offspring who could be soon out of work.

I am sure a lot of parents would help their kids out, unfortunately some of the parents and some of the kids need to wake up and smell the coffee with reagrds to a house being the be all and end all

Withdrawls from BOMAD will slow down , but it will never end

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furthermore, the BOMAD is equally cyclical - if not more so - in sentiment to the commercial banks.

Parents are just as emotional and blinkered as the rest of society.

chance of getting the odd £10k out of BOMAD at top of market - high, as they too think that prices will only ever go up.

Chances of getting this at the bottom of the market - even tho they still have the cash - very low.

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furthermore, the BOMAD is equally cyclical - if not more so - in sentiment to the commercial banks.

Parents are just as emotional and blinkered as the rest of society.

chance of getting the odd £10k out of BOMAD at top of market - high, as they too think that prices will only ever go up.

Chances of getting this at the bottom of the market - even tho they still have the cash - very low.

Massive over generalisation... it depends on each parents and childs individual circumstances.... I don't think you could possibly say with any degree of back up whatsoever that parents who have a considerable amount of cash would have a much much lower propensity to help their children when in need than before the crash.

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Even those who have had their mortgage costs cut?

... & paid for by me & other silly savers

I ditched Sterling on principle.

I wish more had.

I was about to say BUY GOLD!

Then I saw, oh it's you, Laura. :)

But to others who haven't yet thought about it if you want to stuff the bankers and

get out of their rip-off schemes, well, buying gold is one way to do it.

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The Bank of Mum and Dad..

Is it a prospering institution, or one under growing pressure from a dozen directions?

Not everybody has MEWed for holidays, flash cars and conservatories.

Amazingly enough, some of us don't give a toss about flash cars, designer bathrooms or granite worktops. Some of us are still cooking perfectly edible meals in kitchens and showering in bathrooms that were new nearly (shock horror!) 20 years ago.

This particular branch of the BOM&D is still planning on helping out when the time comes, and is fully expecting to be well able to do so.

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I don't think you could possibly say with any degree of back up whatsoever

I have spoken from direct experience of family and friends. I admit that my own family makes me tear my hair out.

I am not omnipotent so my info may be biased misinterpreted or skewed, it is certainly open to argument, but I do have backup.

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Not everybody has MEWed for holidays, flash cars and conservatories.

Amazingly enough, some of us don't give a toss about flash cars, designer bathrooms or granite worktops. Some of us are still cooking perfectly edible meals in kitchens and showering in bathrooms that were new nearly (shock horror!) 20 years ago.

This particular branch of the BOM&D is still planning on helping out when the time comes, and is fully expecting to be well able to do so.

This thread is interesting, but because my experience of BOMAD (and grandparents) has not been from house equity but from savings. Savings that were specifically set aside for me. And other middle class parents will be saying, well we are not getting any interest on our savings so many as well give it to our kids to help pay down debt.

I plan to help out my kids when the time comes (they are 3 and 5) am saving for them, do not plan to do it out of home equity.

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