Parents 'raid savings to fund property purchasing'

Mums and dads are prepared to withdraw cash from their saving accounts to help their grown-up children purchase their first home, a new study indicates. Significant numbers of parents are withdrawing money from their saving accounts in order to help their children get on the housing market, new research shows.

Figures released by Lloyds TSB reveal that some seven out of ten mums and dads with grown-up offspring believe that now is the perfect time for them to buy their first home.

As such, 23 per cent of these people are prepared to take out cash from their UK account in order to fund their children with such a purchase.

At present, less than one-tenth (eight per cent) believe that they already have enough money to help each of their children buy their first home.

However, 14 per cent claim that they will need to carry on making contributions into a saving account in order to do this.

Research from the firm also indicates that around half of those questioned claim they are more likely to provide financial assistance to their children if they could secure a mortgage which would allowed their savings to be returned to them with interest.

Such figures come as Lloyds TSB points to research from the Council of Mortgage Lenders which reveals there were 19,200 first-time buyers purchasing homes in August, up from the 8,600 buying at the start of the year.

Stephen Noakes, commercial director of mortgages for the bank, states: "The current housing market presents a real opportunity for first-time buyers, as long as they are ready to buy with a deposit. Housing affordability is back to the level it was in 2003, so many parents with grown-up children want to help them take advantage by using their savings."

However those looking to help their children were advised against emptying their ISA as doing so will see them lose out on the tax-free saving benefits attached to such accounts. Instead, people should look to take out money from accounts which do not charge for withdrawals.

The news comes as recent figures from Nationwide revealed 39 per cent of people questioned in September believed it was a good time to make a major purchase such a house or car. This was up from the 33 per cent who felt this way in August.