No strings for Bank of Mum and Dad customers
The Bank of Mum and Dad is now the fifth largest home loan lender in Australia behind the big four banks, with New South Wales parents lending an average of $88,350 per family to help children beat property price hikes.
Financial product comparison site Mozo found more than a quarter (29 per cent) of Australian families offered assistance to their children, with 43 per cent of those allowing children to live at home rent free to save for a house.
New South Wales (NSW) parents lend an average of $88,250 per family, ahead of the Victorian and South Australian branches of Bank of Mum and Dad ($63,000). Of these parents, 67 per cent expected no financial reimbursement from their children.
Mozo director Kirsty Lamont said the 618 per cent increase in house prices since the 1980s made buying property without parental help difficult.
“For younger generations aspiring to own their own home, the sheer luck of family assistance can be a deal breaker as to whether or not they have the opportunity to purchase their own property,” she said.
“It can take years to scrimp and save for a home deposit, all the while house prices continue to skyrocket, becoming increasingly inaccessible.”
Mozo also found parents were likely to contribute toward a house deposit (41 per cent), act as a guarantor, and assist with repayments. In order to meet customer demand at the Bank of Mum and Dad, 66 per cent of Australian parents dipped into their own savings, while more than a quarter (26 per cent) cut back on expenses and some mortgaged the equity in their home.
The national total leant out by parents stands at $65.3 billion, with total contribution by state reflective of national property prices.
Financial contribution by state:
|
New South Wales |
$32,706,319,072 |
|
Victoria |
$16,555,222,805 |
|
Queensland |
$6,949,562,677 |
|
Western Australia |
$6,753,719,278 |
|
South Australia |
$3,558,553,305 |
|
Australian Capital Territory |
$664,798,500 |
|
Tasmania |
$627,427,500 |
|
Northern Territory |
$87,420,000 |
Source: Mozo
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