Grandparents have the biggest lending power, according to research conducted by Devon insurance specialists.
Kevin Butler, a former South West agent for the Bank of England, conducted the research in his role as economics adviser for Taunton-based medical insurance specialists WPA.
His research showed that Britain’s biggest funding bank could now be the ‘bank of Granny and Grandpa’, with combined assets totalling £1 trillion more than the biggest high street lender.
Grandparents are already funding their grand children to the tune of £2.8 billion per year, paying the fees for one in four private school pupils and delivering 35% of all childcare for families with working mums.
Now they could also overtake parents as the lender for first-time home buyers.
Mr Butler said: “Since the recession and the banking crisis in 2008, many young people have come to rely on mum and dad for help – including loans to get on the housing ladder.
“That bank is now being squeezed, so the bigger resources of their grandparents could see a generational shift in family funding.”
According to Mr Butler’s research, the total assets of Britain’s grand parents now exceed £2,500 billion.
The ‘bank of Mum and Dad’ has assets totalling slightly more than HSBC, the biggest mainstream bank, at about £1,500 billion.
At a time when most major banks have constrained their lending and are getting smaller, the bank of granny and grandpa has been growing in assets and lending activity.
The latest ‘Wealth and Assets Survey’, published by the Office of National Statistics, shows the total assets of granny and grandpa place them as the biggest bank in the UK, with the bank of mum and dad relegated to second place and the High Street’s big banks getting smaller.