A trend is emerging in Australia’s first home buyer market.
“Mum and Dads” are increasingly giving their first home buyer children deposits and other financial assistance to get their first home.
According to Australian research company, Lender Research, first home buyers are increasingly being supported by their parents, with up to 1 in 3 first home buyers being given direct financial support.
One Real Estate agent said the trend was becoming more prevalent.
“It has becomes common for parents to help out, but it’s hard to put an actual figure on it as not all first-home buyers tell you they are being assisted with a deposit, so it actually may be more than one in three,” Real Estate Agent Sue Tam told news.com.au
The research into first home buyers trends said over $200 million is being gifted by Aussie parents for a first home deposit in the last year alone.
The typical first home buyer was also supported by their parents in some way in about 80% of cases, with parents gifting money for a first home deposit, interest free loan or acting as a guarantor.
10-years ago, those support figures were around just 10% of first home buyers. Now baby boomer parents are spending big to keep their kids into their first home.
“Since the GFC, deposits as gifts have taken over first-time buyers relying on equity in their parents’ home to get a loan approved because it’s a lot financially cleaner for the family if things go pear shaped, such defaults on the mortgage or divorce,” Andrew Hill, a Brisbane based lending expert told News Corp.
Hill suggested with housing prices rising about 10% per year, and Australian banks putting strickter lending practices in place after the Global Financial Crisis of last decade, having a parent to support a first home buyer was certainly becoming a trend that will increase in years to come.
Big lenders, like ING, said they welcomed the trend.
“A larger deposit is always a good thing for first home buyers so that they do not put themselves under too much pressure in meeting repayments,” a spokesperson for the Dutch company said.
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