The only Aussie bank that doesn't expect repayments

Yahoo

03-05-2025

Australian parents are digging deep into their pockets to help their children get onto the property ladder, but the way they're doing it has changed dramatically. The Bank of Mum and Dad has now turned into the Gift from Mum and Dad.
Financial site Mozo has discovered 75 per cent of parents are giving their kids money for a home deposit without expecting it to be repaid down the line. That's a massive jump from the 33 per cent who said the same back in 2021.
Rachel Wastell, Mozo's personal finance expert, told Yahoo Finance this is a "significant generational shift" in the way that the Bank of Mum and Dad is now operating.
But she warned several pitfalls are emerging as a result of this change.
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Mozo's research found parents are now giving, on average, $74,040 to their child to help them get on the property ladder.
That can be a game-changing amount of money to someone, and can get them across the line to secure the keys to their castle.
But Wastell told Yahoo Finance that it's only one piece to the mortgage puzzle."It's exciting to get a gift, obviously, and to be able to get that deposit, but if it gives you a false hope that you can afford more than you can, does that put you in a sticky predicament later?" she said.
She said it's really important to look at a mortgage as the weekly, fortnightly, or monthly repayments, rather than just the property price and deposit that's needed.
"You really need to sit down and say, 'Okay, can I can I afford this loan?'" Wastell said.
"Not just at the rate that's being offered, but if the rates change."
One in three parents feel some sort of emotional pressure to become the Bank of Mum and Dad when their kids are buying property.
But some are going to extreme lengths in order to provide.
Mozo's report found 3 per cent of parents are taking out a loan themselves or using a credit card to give their kids the cash boost.
This statistic left Wastell "shocked".
"If you are a parent who is putting yourself into high-risk debt situations to help your children get on the property ladder, I think you need to be very concerned about that," she told Yahoo Finance.
"If you can't repay that and you're getting into credit card debt to help your child, I just it's a it's a bad situation."
The personal finance expert has also heard anecdotally that parents are delaying their own retirements in order to give their kids a leg up.
"What happens if you get yourself into so much to helping your children that they then have to turn around and try and help you?" she said.
"There's a whole range of kind of risky situations that could happen there.
"The support is great, but just make sure, if you are a parent, that you can afford it."
Gifting $74,040 is no small chunk of change.
Back in 2021, the average loan from the Bank of Mum and Dad was $69,907.
But Mozo found that because Aussie house prices have soared by 51 per cent in the last five years, a 20 per cent deposit has increased by $66,160 over the same period.
Just over half (54 per cent) of parents said their cash boost to their kids came from savings, while 29 per cent came from their income.
The third most popular form was cutting back on personal expenses (19 per cent), while an early inheritance and acting as guarantor came in joint fourth at 8 per cent.
Four per cent of parents are either delaying their retirement or selling their assets to help out.
Back in 2021, 33 per cent of parents didn't expect to be repaid for their gift, 22 per cent expected full payment plus interest, and 25 per cent wanted to be repaid without interest.
Fast forward to 2025, that's now changed to 75 per cent not expecting repayment, 3 per cent want it all back plus interest, and 12 per cent are just happy with being repaid without interest.
Nearly a quarter (23 per cent) of parents have also allowed children to live at home rent-free while they saved for a deposit, which is up from 15 per cent in 2021.
Interestingly, that cost to parents has dropped dramatically.
The cost of having kids live rent-free with them was $13,845 in 2021, but only $6,226 this year.
"The shift suggests that while the trend of providing free accommodation to children is more common, parents may be opting for a 'set them up and send them off' approach," Wastell said.
"Perhaps parents are offering this support for shorter periods, or with tighter budgets, as larger upfront gifts become the norm."