Fifth biggest mortgage lender is someone you know
IT appears Aussie parents will go to great lengths to fulfil the Australian dream of home ownership for their children, with new research showing the Bank of Mum and Dad is now the nation's fifth largest mortgage lender.
Financial comparison website Mozo.com.au found parental finance's ranking behind the Big Four banks - ANZ, CBA, NAB and Westpac - indicates a shift in funding, with many first home buyers unable to independently take their first step on to the property ladder.
The research shows 29% of Australian families offer financial assistance to their children, equating to a national figure of around 1.02 million families.
The national average lent to children sits at $64,206 and as a whole, the Bank of Mum and Dad have lent $65.3 billion to their children.
"For many first home buyers, house prices around Australia can be absolutely daunting. It can take years to scrimp and save for a home deposit, all the while house prices continue to skyrocket, becoming increasingly inaccessible. We're seeing the Bank of Mum and Dad playing a huge part in helping children take their first step towards acquiring a home," Mozo Director Kirsty Lamont said.
"With Australian property prices rising by 618% over the past 30 years and national incomes failing to keep up, the Bank of Mum and Dad is proof of family generosity but also points to a broken property market for younger generations."
Mozo's Bank of Mum and Dad survey found that the most popular ways for parents to help their kids get a foot on the property ladder are allowing their child to live at home rent free while saving for a deposit and contributing money towards a deposit. Less popular options included acting as a guarantor, assisting with repayments, or buying property on behalf of or as a partner of the child.
In order to help their kids onto the property ladder, 66% of parental lenders have chipped into their own savings while 26% have cut back on expenses and 13% have pulled equity from their own home.
The majority (67%) did not expect repayment for their contribution while 29% expected payment in part or full, without interest.
Have you used the Bank of Mum and Dad, are are you a helping your kids financially? Join the conversation below.