And according to the first Bank of Scotland Family Savings Report the percentage of young adults relying on handouts from their parents has increased significantly over the past two decades. More than four out of five young adults (84%) in Scotland turn to their parents for financial support, compared to just 61% in the 1980s.
Scots are more likely to borrow within the family, according to research by R3, the insolvency trade body. Its recent survey found 29% of Scots would borrow from parents, grandparents and other family members compared to an average 20% across the UK.
Intriguingly, the Bank of Scotland research claims that whereas the UK is a nation of "cash-point parents", who provide a relatively high level of financial support to grown-up children, but have a relatively low level of influence in their kids' lives, in Scotland it is different. Almost 40% of Scottish parents are said to be "Hasselhoffs" – "have a strong say in everyday life and hand out frequent financial support".
Greg Coughlan, head of savings at Bank of Scotland, says: "Much has been said about the bank of mum and dad in relation to the cost of getting on the housing ladder, but it is clear that Scottish young adults rely on financial support from their parents for a lot more than this."
Over three in five (62%) parents in the UK are giving, or plan to give, their children aged 18 or over more financial help than they received from their own parents, according to research from Standard Life.
A third of parents expect to have to help with housing and living costs, and 26% with house deposits, as well other finances into adulthood. Over half of parents feel "it is their duty as a parent", a third worry that otherwise their kids will not achieve their full potential, while 37% cite current economic pressures.
Julie Russell, head of customer relationships at Standard Life, says: "The economic downturn and price increases have left many parents expecting to have to financially support their children into adulthood. This creates a significant challenge – how to balance the desire to provide for your child, even when they become adults, as well as save to secure your future."
Another study last month, from protection specialist LV=, put the average handout at £2103 a year, or £175 per month per child, on basic living costs, and a further £9500 in total on major items including housing, education and weddings.
"Parents expect to foot the bill well into their kid's adulthood, as it isn't until age 38 that they expect their children to be financially independent," says the insurer's Mark Jones.
Of the 4.4m adults in the UK receiving financial support from their parents, 1.6m still live at home. Of these, over half (58%) are in their twenties, a third (29%) are in their thirties and one in ten (12%) are over 40.
The average age of a first-time buyer in the UK today is 38, predicted to rise to 41 by the year 2025.
A third of parents with adult children living at home cite their children not being able to get onto the property ladder, and not wanting to rent, as the reason.
NatWest this week became the third lender to offer a five-year fixed-rate mortgage at under 3% – but only on 60% loan to value. Although more than 200 mortgage products saw their rates cut during July, most were not first-time products.
Sylvia Waycot at information group Moneyfacts says: "Industry experts and consumers alike will have been hoping to see the first-time buyer market rejuvenated by the Bank of England's Funding for Lending scheme, but current evidence suggests that those in the 90% or higher loan-to-value bracket are not the ones getting the best value from the recent rate cuts."
Meanwhile, instead of lamenting lost freedoms, parents and their "boomerang" children should see the situation as a financial opportunity, says bank first direct.
It says children staying at home and paying a rent can make a significant contribution to the parental mortgage, whilst saving on the fast-rising costs of renting. "This, coupled with the rising cost of living, is encouraging more and more kids to return to the nest," says the bank.
An offset mortgage in particular enables parents to use rent to make unlimited overpayments, reducing the term and total cost of their mortgage. First Direct says other benefits include "better home security, someone to look after pets and plants when mum and dad are away, and satisfaction in the knowledge that their children are saving for their future".
The average one-bedroom flat rental in Scotland is now £500 a month. If parents charged only 75% of that and funnelled it into their mortgage for three years, they could reduce their loan term by three months and save £828 in interest – extending it to five years would save £2237 and slice a further five months off the length of the mortgage.
For the kids, there is not only a potential saving on rental costs but on bills – which in a flat total at least £200 a month. They do not face a possible hike in the rent out of the blue from a landlord, and can focus on raising a deposit for their own place. Over five years, the savings on rent and bills could approach £20,000, a healthy deposit with some to spare for other costs.
Ian Bartholomew at first direct commented: "If both parties can manage to get along, older children returning to the family home can be a great idea. It can help children save for a deposit to buy their first home more easily and parents can save money and reduce the amount owed on their mortgage."
RULES FOR RETURNING TO THE NEST
Parents
l Your child has been away and experienced autonomy, so be aware you're no longer 100% in control of their life.
l You should expect your progeny to keep the communal parts of the house to the level of cleanliness you've always expected, however once they're paying, their room is off limits.
Kids
l Even though you feel like an adult, your parents probably still see you as the moody teenager you were when you left. Try not to prove them right – resolve any disagreement with adult conversation.
l Yes you've kept your own hours for years, but now you're back under their roof your parents are responsible for your safety again - call them and let them know if you're going to be late.
Both
l Set regular meetings to assess where you're at and if the situation is still working for everyone. This will stop arguments boiling under the surface until they explode when the pressure gets too much.
Source: first direct
CASE STUDY
Jeannette Easton from Motherwell wanted to make the most of her savings to pay down her mortgage, so she used an offset mortgage with first direct – it currently offers a 4.29% rate on a three-year fix (65% loan to value). She says: "My savings were offsetting my mortgage and that was fantastic because my mortgage was going to be paid off in a relatively short space of time."
When one of her daughters returned to the nest, under temporary financial pressures, mum found her monthly savings being squeezed as well. "You just have to support them the best way you can," Ms Easton says. Looking for a longer-term solution, she went back to first direct and was able to use her savings and her borrowing power to take out a new home loan – a repayment mortgage on a property for her daughter. "At the moment it is not her house but she does have security, and hopefully in future she will be able to take it over."
