Full width project banner image

The Bank of Mum and Dad - Helping to Fight Tough Lending Conditions

Dec 04, 2018

Share this article

Improving housing affordability may be attracting first-home buyers to the market, however tighter lending conditions are said to be causing them to rely on the ‘bank of mum and dad’ to get onto the property ladder.

Experts say tighter lending conditions mean more buyers will require parental assistance to buy a home.
Research from financial comparison website Finder has shown that nearly half of first-home buyers get a financial boost to their deposit from their parents, and one in five have help with the deposit as well as through their parents acting as a guarantor.

Most economists surveyed in the research said the number of first-home buyers relying on their parents won’t decline, with 35% of economists predicting an increase and 41% saying they expect the rate will remain the same.

Domain research analyst Eliza Owen said tighter lending conditions are a double-edged sword for first-home buyers.

“The benefits of having higher loan restrictions is that there’s less capital to bid up prices, but there’s also less access to credit,” Ms Owen said.

“Tighter lending restrictions would likely increase that rate of first-home buyers who are relying on their mum and dad, particularly when coming up with that initial deposit,” she said.

Ms Owen said the current tighter lending restrictions would affect low income earners, or those who couldn’t get help from their parents.