New report finds Bank of Mum & Dad is nation’s fifth biggest lender, ahead of ING DIRECT and Suncorp
29% of Australians aged under 34 are reliant on their parents to provide a deposit for a mortgage, a new survey by State Custodians has revealed. A further 26% of respondents said they were waiting on inheritance to help them buy.
A separate survey by comparison website Mozo found that the ‘Bank of Mum & Dad’ is second only to the majors as Australia’s biggest lender. Parents have lent $65.3 billion to Aussie home buyers, putting them ahead of ING DIRECT ($42bn) and Suncorp ($40bn).
The average family lent $64,206, although this figure was far higher in New South Wales, at $88,250 and lower in the Australian Capital Territory ($20,083) and the Northern Territory ($15,000).
The Bank of Mum & Dad, unlike its competitors, rarely requires the loan to be repaid – only a third of parents were to be looking to be at least partially repaid, Mozo found.
Doing the sums on deposits
According to State Custodians, the average Australian would have to save $1,116 every month for five years to afford a 20% deposit on an average FHB property.
It’s perhaps for this reason that contributing money towards the deposit is one of the main ways Australian parents help their kids, with 41% taking this approach. Allowing their children to live at home rent-free was the other popular approach, taken by 41% of parents.
Acting as a guarantor was relatively unpopular (13%), as were assisting with repayments (9%) and buying a property outright for a child (9%).
The misery doesn’t stop at settlement
The average loan to first home buyers increased by 1.2% to$365,600 over the June quarter, according to Adelaide Bank and the REIA’s Housing Affordability report.
Not only is this trend driving up deposits, it’s also driving up repayments for those who do make it onto the ladder. 31.4% of the median family income is now required to meet mortgage repayments, 1% rise over the quarter.
However, the huge deposit hurdles and repayment demands don’t seem to be fazing Australians, with the number of FHBs growing 14% over the quarter.
