INDUSTRY NEWSNationalReal Estate News

Has the bank of Mum and Dad shut its doors?

Despite record-high property prices and surging interest rates, just 1-in-10 first-home buyers are tapping into the bank of Mum and Dad to get into their first property.

According to Finder, 11 per cent of first-home buyers received money from their parents to buy a home.

On average, they received $56,000, which was around half of what the average home buyer puts down as a deposit.

However, not all first-time buyers were so lucky, with 35 per cent not receiving an offer of help from the bank of Mum and Dad

While 12 per cent received help from their parents in other ways.

According to the survey, eight per cent of first-home buyers asked their parents for help but the request was denied, while nine per cent had their parents guarantee their loan.

A further 36 per cent didn’t want financial assistance from their parents towards a deposit.

Home loans expert at Finder, Richard Whitten said saving for a deposit is no small feat.

“Getting on the property ladder can feel like an impossible dream, but many battle to do so without the help from the bank of mum and dad,” Mr Whitten said.

“For many home buyers, there is no bank of mum and dad. 

“They’re on their own.”

Mr Whitten said over the past few years, saving for a house deposit has become easier, with many buyers able to stash away their cash during lockdown. 

However, the cost of living has forced Aussies to cut savings.

“Rising costs and skyrocketing interest rates will see plenty of Australians priced out of the market without financial assistance – a worry felt by thousands of house hunters across the country,” he said.

He said the average first-home buyer deposit in Australia now tops almost $119,000 – more than the average full-time salary of $94,000.

It would take the average first-home buyer more than 12 years to save up that amount of cash, taking into account potential interest earned in an average savings account with a rate of 2.7 per cent.

Mr Whitten said prospective first-home buyers need to find ways to supercharge their savings.

“Look for ways to boost your capital,” he said.

“With some high-interest savings accounts surpassing 5.5 per cent, getting a decent earnings rate for your savings is becoming easier.”

He said every dollar counts when you’re on the road to homeownership.

“There are plenty of schemes and incentives for first home buyers to take advantage of,” he said.

“If you qualify for a first homeowners grant, this can form part of your deposit.

“Getting your parents to go guarantor can be an option for some buyers if direct financial support is out of the question. 

“With millions of first home buyers going it alone, they need every trick in the book to save up a home deposit faster.”

Show More

Rowan Crosby

Rowan Crosby is a senior journalist at Elite Agent specialising in finance and real estate.