Latest news with #Wastell
Yahoo
03-05-2025
- Business
- Yahoo
The only Aussie bank that doesn't expect repayments
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. Mums and dads warned early inheritance cash boost for struggling kids could impact pension Woolworths worker with three jobs shares bank balance as average Aussie savings revealed Banks reveal impact after Aussies try to drain ATMs in cashless protest 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."
News.com.au
01-05-2025
- Business
- News.com.au
Insane sum average parent is gifting kids for property buys
Australian parents are spending hundreds of thousands to get their children on the property ladder, with new research revealing most don't want to be repaid a cent. For years the so-called 'bank of mum and dad' has been Australia's silent property giant, helping first-time buyers with home loans and financial lifelines. Now the bank of mum and dad has become the 'gift of mum and dad' as recent research by Mozo Money showed 75 per cent of parents who help their kids buy a property don't want the money back, despite them forking out more than ever before. There has been a significant shift in just how far parents are going to help their adult children to get into the market, as just four years ago only one third of parents didn't expect to be repaid. As property prices have lifted by more than 50 per cent in five years, deposits have surged by an average of $66,000, according to Mozo research. Mozo's personal finance expert Rachel Wastell said many young buyers are relying on parental support to bridge the deposit gap as Australian house prices have skyrocketed. 'This really shows how hard it's become for first-home buyers to climb onto the property ladder,' Ms Wastell said. 'In the past, parents might have given their kids a boost up and expected them to pay them back once they'd found their footing. 'But now, the bottom rungs of that property ladder are gone, and parents aren't just offering a hand, they're building those rungs themselves, often with no expectation of being repaid.' Aussie parents are gifting on average $74,000 to their children, which has increased by $4,000 since 2021, Ms Wastell added. Many parents went the extra mile and purchased a home for their child or co-purchased along with them. 'There's no doubt parents are stepping in where the market, and wages, have failed first time buyers, but it's also creating emotional and financial tensions,' Ms Wastell said. Those who purchased a home for their children were spending an average of $405,000, while others who co-bought with their son or daughter spent around $252,000. 'It's one thing to help your kids, but using debt to do it is dangerous, parents could be trading short term generosity for long term financial concerns,' Ms Wastell said. 'We're seeing some parents delay retirement, dip into savings, or even rely on credit cards and loans to support their children,' she added. Another common way to fund children was letting them stay at home rent free, which is giving adult children an average financial boost of $6,227. While more parents are giving money, fewer are willing to downsize their homes to do so, the research showed. In 2025, 77 per cent of parents said they wouldn't consider downsizing to help financially, up from 55 per cent in 2021, and only 3 per cent have actually downsized compared to 14 per cent four years ago. 'With property prices skyrocketing, it could be that many Aussie parents are 'equity rich' and have the confidence to gift without changing their lifestyle,' Ms Wastell said. 'Aussie parents are clearly generous, but in 2025 they're drawing the line at giving up the family home, especially when that home has most likely become their biggest financial asset.' 'Before offering that helping hand, it's crucial to make sure you're not relying on high interest debt and that your own financial future is secure.'
Daily Telegraph
01-05-2025
- Business
- Daily Telegraph
Insane sum average parent is gifting kids for property buys
Australian parents are spending hundreds of thousands to get their children on the property ladder, with new research revealing most don't want to be repaid a cent. For years the so-called 'bank of mum and dad' has been Australia's silent property giant, helping first-time buyers with home loans and financial lifelines. Now the bank of mum and dad has become the 'gift of mum and dad' as recent research by Mozo Money showed 75 per cent of parents who help their kids buy a property don't want the money back, despite them forking out more than ever before. There has been a significant shift in just how far parents are going to help their adult children to get into the market, as just four years ago only one third of parents didn't expect to be repaid. As property prices have lifted by more than 50 per cent in five years, deposits have surged by an average of $66,000, according to Mozo research. MORE: Savvy way these Aussies bought homes with just $10k MORE: Sydney home prices to explode post-election Mozo's personal finance expert Rachel Wastell said many young buyers are relying on parental support to bridge the deposit gap as Australian house prices have skyrocketed. 'This really shows how hard it's become for first-home buyers to climb onto the property ladder,' Ms Wastell said. 'In the past, parents might have given their kids a boost up and expected them to pay them back once they'd found their footing. 'But now, the bottom rungs of that property ladder are gone, and parents aren't just offering a hand, they're building those rungs themselves, often with no expectation of being repaid.' Aussie parents are gifting on average $74,000 to their children, which has increased by $4,000 since 2021, Ms Wastell added. MORE: Former MasterChef warehouse up for lease Many parents went the extra mile and purchased a home for their child or co-purchased along with them. 'There's no doubt parents are stepping in where the market, and wages, have failed first time buyers, but it's also creating emotional and financial tensions,' Ms Wastell said. Those who purchased a home for their children were spending an average of $405,000, while others who co-bought with their son or daughter spent around $252,000. 'It's one thing to help your kids, but using debt to do it is dangerous, parents could be trading short term generosity for long term financial concerns,' Ms Wastell said. 'We're seeing some parents delay retirement, dip into savings, or even rely on credit cards and loans to support their children,' she added. Another common way to fund children was letting them stay at home rent free, which is giving adult children an average financial boost of $6,227. MORE: Nearly every Aussie is charging phone wrong While more parents are giving money, fewer are willing to downsize their homes to do so, the research showed. In 2025, 77 per cent of parents said they wouldn't consider downsizing to help financially, up from 55 per cent in 2021, and only 3 per cent have actually downsized compared to 14 per cent four years ago. 'With property prices skyrocketing, it could be that many Aussie parents are 'equity rich' and have the confidence to gift without changing their lifestyle,' Ms Wastell said. 'Aussie parents are clearly generous, but in 2025 they're drawing the line at giving up the family home, especially when that home has most likely become their biggest financial asset.' 'Before offering that helping hand, it's crucial to make sure you're not relying on high interest debt and that your own financial future is secure.' MORE: Amy Shark scores $2.35m payday Jamie Durie reveals favourite dream home feature
Yahoo
01-05-2025
- Business
- Yahoo
Major interest rate cut warning amid fears banks won't pass on $190 relief
Australian homeowners have been cautioned not to expect another full interest rate cut after the Reserve Bank (RBA) meets later this month. The Board will convene on May 19 and 20 to decide whether to hike, hold or cut the cash rate from the current 4.10 per cent. Many banks and economists have predicted there will be a 25 basis point reduction to 3.85 per cent. While that will be a big win, Mozo's personal finance expert Rachel Wastell told Yahoo Finance it might not flow completely down the line. "Past performance isn't indicative of future performance, but, historically, the second cut doesn't get passed on as much as the first," she said. Commonwealth Bank issues RBA interest rate cut warning for mortgage holders Woolworths worker with three jobs shares bank balance as average Aussie savings revealed Worker forced to push back retirement after superannuation drained After 13 rate rises beginning in 2022, homeowners across the country received their first slice of mortgage relief after the February RBA meeting. The 25 basis point reduction was music to many ears, some of whom were worried they would be forced to sell their home if there wasn't a cut. Within minutes of the RBA's decision, banks big and small announced they would pass on the lenders, Virgin Money and BOQ Specialist, didn't follow the pack because they said they were already offering competitive interest rates. Wastell told Yahoo Finance this trend could get bigger after this upcoming RBA meeting. "There may be a few lenders that decide not to pass on this cut or don't pass it on in full," she said. "And in that case, you really need to be looking at whether it's worth sticking with a big bank and waiting for the RBA to move." Figures provided by REA Group to Yahoo Finance showed a cut of 25 basis points would save Aussies anywhere between $40 and $190 a month depending on where they live. This is based on a median-priced home that was bought with a 20 per cent deposit for a 30-year loan on an average interest rate for new mortgages. Wastell's preliminary data found some small lenders had already started lowering their variable interest rates ahead of the Board's May gathering. She said the average rate is around 6.2 per cent, but she's seen "dozens" of offers sitting around the 5.7-5.74 per cent range. "Don't discount the little guys," she told Yahoo Finance. "I think there's a fear in Australia that we need to be with these major banks, but the amount of money you can save by switching to a smaller lender, some of which are backed by bigger banks, can impact how much you're paying every month without having to wait for the RBA." Mozo data recently revealed homeowners could save more than $300 per month by switching to a smaller lender offering a better-than-average rate. "You could be throwing away nearly $4,000 a year in unnecessary repayments," Wastell said. While the RBA sets the official cash rate, it's up to banks and lenders to pass that down to their customers. For the 10 rate cuts delivered by the RBA between 2015 and 2020, only four were passed on by Commonwealth Bank (CBA), NAB and ANZ, according to Canstar. Westpac only handed on two. Funnily enough, for every single one of the RBA's interest rate hikes, the banks passed those on in full. Economists and experts have predicted the February cut was one of many to be expected in 2025 as inflation is now within the RBA's target band of 2-3 per cent. Data released this week confirmed trimmed inflation, which is what the RBA tracks, hit 2.9 per cent for the year, which is down from 3.3 per cent recorded in the December quarter and the lowest level since December 2021. The Big Four all believe May will see another cut, but they're divided on how many more there will be: CBA - Three cuts in May, August and November to bring end-of-year cash rate to 3.35 per cent Westpac - Three cuts in May, August and November to bring cash rate to 3.35 per cent NAB - Five cuts in May (a double cut of 50 basis points), July, August, November, and February to take cash rate to 2.60 per cent ANZ - Three cuts in May, July and August to bring cash rate to 3.35 per cent There were fears Donald Trump's Liberation Day tariffs would wreak havoc on Australia, and a supersized cut was once on the cards. However, that risk has been downgraded slightly and the majority are sticking to their 25 basis point cut prediction. CBA recently pointed out that the consumer price index data wasn't all good news and the bank felt a rate cut is 'not a done deal' anymore. 'The case to normalise the cash rate to a more neutral setting remains, but we maintain that the Board will take a gradual approach in cutting rates despite CBA recently downgrading its forecast for the global economy," CBA's head of Australian economics Gareth Aird said. But Yahoo Finance contributor Stephen Koukoulas said the RBA is well within its capacity for an aggressive rate-cutting cycle. "Unless the RBA acts swiftly to cut interest rates, the economy is at risk of seeing growth and inflation getting too low — and unemployment too high," he said. "Inflation has well and truly hit the RBA's target band and now we are broaching another dangerous territory."Sign in to access your portfolio
Yahoo
28-04-2025
- Business
- Yahoo
NAB 'quietly' cuts interest rates sparking urgent warning: 'Act now'
NAB has slashed its term deposit interest rates once again, continuing the downward trend that began even before the Reserve Bank of Australia (RBA) started lowering the cash rate in February. All of the Big Four banks have cut their rates in recent weeks, sparking an urgent warning for savers. NAB has reduced interest rates across most of its term deposit offerings, with rates cut by up to 10 basis points. Since the last RBA meeting, NAB, ANZ and Westpac have cut their one-year rates by 10 basis points, while Commonwealth Bank has cut by 20 basis points. Mozo personal finance expert Rachel Wastell told Yahoo Finance that all the Big Four banks were now offering one-year rates under 4 per cent, which is a 'big step down' from what we saw just 17 months ago. RELATED Westpac makes early RBA interest rate cut call: 'Lock it in' Homebuyers warned over 'magical phrase' used by agents to increase prices Side hustle with $464 cash boost opens up to 570,000 new Aussies: 'Money to be made' 'At the end of 2023, the Big Four were dishing out 5 per cent plus returns on term deposits, but now it's a race to the bottom - as we officially wave goodbye to the golden era of term deposits,' she said. Westpac is still offering a 4 per cent rate for its 1-year term deposit, but only for customers renewing or opening a term deposit online. In branch, they join NAB and ANZ in offering a 3.90 per cent rate, while CBA offers a 3.85 per cent rate.'The Big Four banks are quietly cutting rates, and loyal savers are paying the price,' Wastell said. 'With the next RBA meeting not until late May, savers should act now if they spot a rate starting with a '4'. "Blink, and it could be gone.' The top one-year term deposit rates are from Unity Bank and G&C Mutual at 4.65 per cent. According to Mozo, savers who switched from the leading Big Four rate of 3.90 per cent to 4.65 per cent could earn $188 a year more on a $25,000 deposit and $75 more on a $10,000 deposit. The big banks have also been slashing their savings account rates, with bonus accounts losing up to 0.50 per cent in some cases. All of the major banks expect the RBA will cut interest rates at its May meeting. However, all eyes will be on the upcoming inflation data out tomorrow. Westpac chief economist Luci Ellis said mortgage holders could 'lock in' a May rate cut, regardless of the inflation data. 'Holding rates steady in the face of the global turmoil and softer momentum in the labour market – for the sake of 0.2 percentage points on inflation – would be very hard to explain,' she said. CBA has also called a May cut a 'done deal', but this is provided inflation prints in line with its forecast. The bank expects trimmed mean inflation will sit 0.1 percentage points below the RBA's forecast, with trimmed inflation expected to rise 0.6 per cent and the annual rate drop to 2.8 per cent, within the RBA's 2 to 3 per cent target band. Here's what the major banks are forecasting: CBA - Three cuts in May, August and November to bring end-of-year cash rate to 3.35 per cent Westpac - Three cuts in May, August and November to bring cash rate to 3.35 per cent NAB - Five cuts in May (a double), July, August, November, and February to take cash rate to 2.60 per cent ANZ - Three cuts in May, July and August to bring cash rate to 3.35 per centSign in to access your portfolio
