‘The bank of Mum and Dad’ dominating the lending market in Australia – AFR

Jennifer Hewett of the Australian Financial Review (AFR) reports on the 5th largest lender in Australia, lending around $65.3 billion – ‘the bank of mum and dad’.

Hewett highlights statistics from a survey completed by Australian financial advisor platform, Mozo, which included 1,000 Australian applicants.

Mozo found 30% of parents (the equivalent to 1 million families), help their children buy their first home by lending them on average, more than $64,000. With a significant 2/3 saying they don’t expect to be repaid.

As per 43% of those surveyed, the most popular method of support, which is not on offer by other banks and is unique to ‘the bank of mum and dad’, is living at home rent-free. Most commonly, these children do so while they save for a home deposit, however, it may be their parents loosing out with the surveyed parents saying this arrangement is worth an estimated $25,000.

However, directly assisting with their child’s home deposit still remains to be the most popular form of assistance for ‘the bank of mum and dad’, with 41% choosing to do so.

Hewett further goes on to highlight the details highlighted by Mozo when funding a home deposit. Identifying $42,343 as the average amount parents lend. With each state on average lending varying amounts, with NSW lending the most, which is $53,000.

Furthermore, Mozo estimates on average parents in NSW lend an estimated $88,250 per family and parents in VIC $63,000.

Hewett puts it into perspective by highlighting in 1986, on average Australians paid $76,278 for a house, which was the equal to 4.4 times their annual income of $17,321. However, in 2016, the average house price rose to $547,714, equivalent to 6.9 times the average income ($78,832).

Finally, Jennifer Hewett sums it up for the big brother banks of Australia. Offering various pieces of advice to better serve their customers and be proactive. Because after all “removing ATM fees is a classic case of too little too late.” With Treasurer, Scott Morrison also affirming banks should be looking to reduce credit cards fees.

Subscribe to Australian Financial Review to access the article in Full!

Credit: Jennifer Hewett

Source: www.afr.com/

Tim K. Dean, Credi Founder | Commentator & Expert on Family Lending, Bank of Mum & Dad and Neo-Credit Scores is available for media interviews and appearances. More…

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