With banks loath to lend to anyone, especially first-time buyers, who can you turn to when you want to get on to the property ladder? For many, the only route is what's come to be termed "the bank of mum and dad", as parents step in with cash help for their kids.

Today's lenders typically demand deposits of 20 to 40 per cent, taking homes out of reach for most first-time buyers. Prices may have dropped, yet many first-timers still find it impossible to raise enough to buy. In the capital, few properties are on offer for less than £150,000 and a typical central London apartment costs around £250,000, which requires a whopping £50,000 deposit.

Sarah Garrett of First Time Buyer magazine says that lenders are "strangling the market" but today's parents are opting to invest via their children rather than leave money in banks. Agents agree that parents now provide deposits for the bulk of first time buys. Winkworth's Jeff Cohen says that last year it was common to see parents on a third viewing of a property but today they are involved from the start: "Parents are now coming to first and second viewings and even accompanying their children when they register. It would seem the bank of mum and dad is once again open for business!"

It may be parental generosity but, with base rates at 0.5 per cent, many parents view helping their offspring as a shrewd investment. Simon Corringham of Faron Sutaria says that, if current base rates continue, the market will be overrun with cash buyers who no longer trust banks to safeguard their cash: "They're fed up with their money earning paltry interest in the face of inflation at three-something per cent and feel their money would be better spent on a buy-to-let investment or a home for their children. There's a trend for parents buying a flat with several bedrooms, allocating one to their son or daughter and renting the rest to their child's friends."

Parents also hope to spare their offspring the unsavoury experience of grotty rented accommodation. Lauren Hooper, 19, studies history at Southampton and lives in a new one- bedroom apartment thanks to her mum Lorena's generosity. Lauren found her home by googling "new-build in Southampton". "When we visited the show apartment, Lauren quickly fell in love with it and, I have to say, nothing else we looked at then measured up," says Lorena who admits to being initially nervous as this was her first investment buy.

When Lauren leaves college, Lorena intends to let the property which was initially for sale at £114,950 but which cost £86,212 under developer Crest Nicholson's EasyBuy scheme, which gives buyers a loan for 25 per cent of equity with no interest to pay for five years. Lauren is grateful for the luxury of a location which allows her to walk to college: "It's ideal. It's a quiet place to study but it is close enough to the city centre to ensure I can go into town."

Lorena's decision to invest in student accommodation may prove sound. In 2008, university applications rose by 8 per cent and, if the recession and a weak sterling continue, figures look set to rise this year. Investment firm Assetz says that investors can expect rental yields of 5 to 6 per cent net. "Investment in university accommodation is already paying massive dividends. It is an area in which I have invested personally over the years and it is the best performing part of my portfolio. Student property funds have topped the leader board of property fund performance over the past couple of years, and the latest surge in applications will continue to drive demand," adds chief executive Stuart Law.

But parents aren't just helping out at the student end of the market. London agency Aylesford International are also seeing growing numbers of parent buys, with no limit on budget says MD Louise Hewlett: "We are currently looking for property for children in the price range of £500,000 up to £2.3m. It is the perfect time for parents to buy taking into account the drop in property values. Their cash will get zero interest in the banks so it's a better financial decision to buy a property which can be rented out until children need a home. They then get higher interest on their capital and it's safer than the stock market."

It may be safer than depositing your readies in an Icelandic, or any other, bank but there are concerns that parents are funding their children's futures by risking their own. A survey by Scottish Widows found that over half of the 20.7 million Britons with children over 16 have given or loaned their offspring an average of £11,776, with nearly half planning to give another £12,564.

The amount given to children by their parents increased from £67bn this time last year to £72.5bn with most using savings but some parents increasing their own debts. Scottish Widows' head of savings and investments Gordon Greig says that the trend could leave some parents vulnerable in their retirement and that young homebuyers may also suffer: "It's questionable whether the current young generation of adults will ever learn the necessary savings habit if their parents continue to bail them out in this way.

As parents tighten their purse strings more than expected in the near future, the bank of mum and dad may not be as giving as it once was; it is more important than ever for people to save consistently."