Quarter of first home buyers had family help

By Phil McCarroll | 18 May 2016
A growing number of Australian families have helped a family member buy their first home by providing financial assistance according to new research by industry super fund-owned bank ME.

According to a survey of 2,000 mortgage holders by ME, 20% of Australian families have provided financial assistance towards a family member’s first home, while 26% of first home buyers said they received assistance from their family.

According to the survey, loans or gifts where the most common form of financial assistance provided, with 22% of those surveyed saying they received a gift or loan  while 5% reported they received support through a guarantor.

The survey also revealed the amount being loaned or gifted between family members to buy property has increased from an average of $27,000 ‘prior to the last five years’ to $42,000 ‘within the last five years’.

The practice is also having an increased impact on people’s retirement options.

Twenty eight per cent of respondents who have financially helped a family member buy a home ‘within the last five years’ said the decision had affected their level of comfort in retirement, up from 21% of those who gave financial help ‘more than five years ago’.

Patrick Nolan, head of home loans at ME, said the willingness of people to sacrifice comfort in retirement illustrates the challenges home buyers currently face.

“That a significant number of Australians are receiving and giving financial assistance to buy a first home and that an increasing number of givers are doing so at the expense of their retirement is further evidence of the challenges of house prices, which have risen steeply over the last few decades,” Nolan said.

“It’s becoming increasingly difficult for parents and grandparents to help family members buy a first home while protecting their own retirement plans,” he said.

While some people may have put their retirement plans at risk, others are making sure their generosity doesn’t come back to bite them.

According to the survey 24% of people who lent money to family member in the past five years included interest as part of the loan compared to just 12% of people who lent money more than five years ago.

There was a corresponding fall in interest-free lending among family members, down from 39% of those lent money more than five years ago to 23% of those who lent money within the last five years.

“Like many parents made their children do odd jobs to earn pocket money, now they’re making them pay interest on the financial help they’re giving to buy their first home,” Nolan said.

Top Suburbs : melton , kariong , dulwich hill , westbrook , keperra


Get help with your investment property

Do you need help finding the right loan for your investment?

When investing in property, it is important to make sure that you not only have the lowest available rate that you can get, but also have the correct loan features for your needs.

Just fill in a few details below and we'll then arrange for a local mortgage broker to contact you and work out what features or types of loans are right for your needs. We'll even help with the paperwork. Plus an appointment is free.

How soon would you like a mortgage?
What is your Annual Household Income i $
Do you currently own any Investment Properties?
Do you own your own residence?
How much equity do you have in all your current properties?
First Name
Last Name
Where do you live?
What number can we reach you on?
E-mail address
We value your privacy and treat all your information seriously - you can check out our privacy policy here