Loans from the bank of Mum and Dad cause financial strain

financial strain

The Canberra Times found that first home buyers who receive loans from their parents are more likely to encounter financial strain later down the track.

The Reserve Bank Australia’s (RBA) economic research department, along with figures gathered from the Household, Income and Labour Dynamics (HILDA) survey of 17,000 Australians, found that a significant 30% of first home buyers who sought help from their parents for a deposit would later encounter financial stress.

Of that 30%, 2/3 would later ask for further support from their family members and friends, two times greater than the number of those who funded their own home deposit themselves.

RBA also highlights that 15 % of these adults who receive help from the bank of mum and dad also struggle to cover utility bills compared to the 10% who independently paid their deposit.

The results highlighted by the Canberra Times in their article showed the significant number of adults turning to their parents for help. The RBA states “parents willing and able to help their children are likely to continue to do so throughout their life.”

However, these results also show that these first home buyers become far more likely to encounter further financial strain later down the track.

Read The Canberra Times article here!

Credit: Eryk Bagshaw

Source: www.canberratimes.com.au/

 

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