About 30 per cent of Australian parents have lent money to their children to buy their first house – but most of them don’t expect to get the money back.
The ‘Bank of Mum and Dad’ is now the fifth-biggest lender in the country behind only the big four banks, according to a Mozo report.
About 29 per cent – or 1.02 million – families have given their kids money to help buy their first home, at an average of $64,206 per family.
The total amount loaned by parents is about $65 million, behind only Commonwealth Bank, Westpac, ANZ and NAB.
The ‘Bank of Mum and Dad’ is now the fifth biggest lender in all of Australia
Parents fork out an average of $64,206 per family to help their kids buy their first home
The ‘Bank of Mum and Dad’ now sits behind only the big four banks for lending in Australia
The most popular method for helping out their kids was to let them live at home rent-free while saving for a deposit (43 per cent), followed by giving money straight-up for a deposit (41 per cent).
Parents also acted as guarantors for loans (13 per cent), assisted with repayments and buying property on behalf of their children (both 9 per cent).
The majority of money parents use to help their children comes from their own savings, a method favoured by two-thirds of them.
Other ways included cutting back expenses (26 per cent), home equity (13 per cent) and delaying retirement (9 per cent).
Most parents chose to cut into their own savings if they are helping their kids buy a house
Most parents who help their kids out with buying a house do not expect to be paid back
The most popular method for helping children out was to let them live at home rent-free
Most parents don’t expect to be paid back, with a whopping 67 per cent saying they don’t anticipate getting back the money they’ve given out.
The average Australian house price in 2016 was $547,714, up almost seven times from the $76,278 it cost 20 years earlier.
Mozo surveryed 1002 parents aged 18 and older in June this year to gather their information.