Last month, it was estimated that the ‘Bank of mum and dad’ had become the fifth biggest mortgage lender in the country, with nearly one-third of first home buyers (FHBs) relying on parental assistance.
Shortly after, the RBA released a research paper warning FHBs that receive financial assistance from their parents when they purchase a home are twice as likely to encounter financial stress down the track:
…a rising though still small share of FHBs are receiving financial assistance from family and friends (Figure 11).25 It is possible that FHBs who have received help to meet the deposit requirement have less financial discipline than FHBs who have saved the entire sum independently…
The full text of this article is available to MacroBusiness subscribers
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness.
Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.
