Why the Bank of Mum and Dad is now a necessity

Property insiders say the “Bank of Mum and Dad” is no longer a bonus, it’s a necessity for many.

Parental wealth is fast becoming the secret weapon of first-home buyers, with family help now the difference between getting a home loan approved or being locked out for good.

With house prices and required incomes surging beyond what most young Australians can save alone, property insiders say the “Bank of Mum and Dad” is no longer a bonus, it’s a necessity.

Canstar research director Sally Tindall said the divide between those with family backing and those without was widening at speed.

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“First-home buyers today aren’t just up against high prices, they’re up against time,” Ms Tindall said.

“Those with family support can move quickly. Those without it are constantly playing catch-up.”

Ms Tindall added that many parents were now treating housing help as an investment in their kids’ future.

“For some families, it’s not just a gift, it’s a strategic decision,” she said.

Canstar research director Sally Tindall says parents are treating housing help as an investment in their kids’ future.

“They want to give their children a head start, knowing how hard it is to build equity from scratch.”

Prominent Melbourne buyers’ advocate Cate Bakos said she had seen adult children move back in with parents to aggressively save, while others were leaning on their families for emotional resilience as much as money.

“There’s often an unspoken pressure,” Ms Bakos said.

“Some buyers don’t want to ask for help, but they feel like it’s their only option.”

“We’re working with families as a unit now — it’s no longer just about the buyer.”

Ms Bakos said in many cases, parents were attending inspections and auctions, acting as sounding boards and unofficial advisers.

Melbourne buyers advocate Cate Bakos, right, said children were staying home to save and leaning on their families for emotional resilience as they hunt for their homes. Daughter Gabriella had already set up a savings account dedicated to purchasing her first property. Picture: Mark Stewart

Zippy Financial principal broker Louisa Sanghera said one of the most common trends was partial deposits, where parents might match whatever their children could save.

“We see parents say, ‘If you save $50,000, we’ll match it’, it becomes a partnership,” Ms Sanghera said.

“That kind of leverage can mean the difference between winning an auction or walking away.”

Ms Sanghera added that buyers were often borrowing at the absolute edge of their serviceability range, so any reduction in upfront cost was hugely helpful.

“We’re not just talking about first-home buyers in their 20s,” she said.

“Some clients are in their mid-30s or even 40s, and they’re still needing help.

“That’s how hard it’s become to enter the market.”

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david.bonaddio@news.com.au

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