Covid causes ‘Bank of Mum and Dad’ to loosen purse strings

5 August 2020 | Finance

A third of those surveyed said since the coronavirus outbreak giving financial gifts to their children or grandchildren had become more important to them.

This is compared to 23% who said it was a priority before the pandemic.

According to Hodge, this suggests the ‘Bank of Mum and Dad’ was still very much open for financial help, with parents being responsible for 72% of the gifts.

There were cases where children or even siblings were happy to offer financial support to loved ones.

Emma Graham, business development director at Hodge: “It’s clear that families feel strongly about offering financial support to each other if they are able and this has increased since the Covid pandemic.”

The findings come from an intergenerational study conducted by Hodge, which interviewed over 3,000 people about their attitudes towards finances and their aspirations for the future.

As part of the study, people were also asked about paying back the gift, with 40% of beneficiaries expecting to pay their parents back, but this dropped to 28% if the gift came from grandparents.

From the gift donor’s perspective, 26% expect the gift to be paid back, however just 15% of grandparents expected the money back.

Graham added: “It is clear that the Covid-19 lockdown and subsequent predicted economic downturn, has led to more families looking to share wealth to help younger children or grandchildren during this difficult time.

“Many people may look to Later Life mortgages, where many products have reduced their rates and have flexible lending criteria, to help out a loved during these difficult times.”

This post has originally been featured in Mortgage Finance Gazette.