Why the ‘bank of mum and dad’ no longer expects to be paid back

The bank of mum and dad is acting less and less like a bank these days, with a growing number of parents handing over money to help kids on the property ladder, with no expectation of ever having it paid back.

The parental ‘bank’ has been the nation’s silent property giant for decades, helping first time buyers with home loans and financial lifelines. But as property prices continue to soar, parents are digging deeper into their own finances to help their children buy a home.

Parents who generously help their kids onto the property ladder could be putting their own retirement at risk, experts warn.Credit: Simon Letch

The average amount gifted for a home deposit has increased from $69,907 in 2021 to $74,040 in 2025 for a home loan deposit, research from datahouse Mozo found.

This financial gift of a lifetime comes as house prices rise by more than 50 per cent in the last five years. Since March 2019, house prices have skyrocketed from $646,000 to $976,800 by the end of 2024.

Gifted deposits

While it was once common for parents to lend money with some form of expected repayment, the increasing willingness of parents to provide money as a gift rather than a loan signals a growing generational divide, according to Mozo.

“In the past, parents might have given their kids a boost up and expected them to pay them back once they 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,” Mozo’s personal finance expert Rachel Wastell says.

Many parents feel they have no choice but to say yes when their children ask for financial help. This is despite more than half (55 per cent) of parents said they never received similar financial help from their own families when they were younger.

Sacrifices made to help their children include dipping into their savings to provide financial aid, or using their income. One fifth of parents cut back on their own expenses to help fund a child’s homeownership aspirations.

Some parents are even turning to credit to help their children get on the property ladder, with three per cent borrowing with credit cards or loans.

Wastell says: “We’re seeing some parents delay retirement, dip into savings or even rely on credit cards and loans to support their children. 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.”

But the loan repayments are still going to sting. Mozo’s analysis shows that to afford the mean residential housing price of $976,800, at an average home loan rate of 6.42 per annum, buyers need to manage monthly repayments of $4,898.

Repayments are even more difficult for first home buyers when you factor in the 3 per cent serviceability buffer mandated by regulators, which pushes the repayments buyers must provide they can afford to over $6,500 per month.

Legacy gift

It’s becoming increasingly common for younger people to receive financial assistance from their parents, with contributions ranging from $40,000 to as much as $600,000, says financial adviser Steven Tropoulos, from Highfield Private.

“Many parents are accessing equity in their homes to provide this support, and in some cases, even drawing from their superannuation or personal savings. While the intention is generous, it often comes at the expense of the parents’ long-term financial wellbeing,” he says.

But the generosity of Australian parents could see them struggle in retirement as parents go without to help their children get onto the property ladder. The amount needed to fund a comfortable retirement has risen to $595,000 for a single and $690,000 for couples at age 67.

He urged parents first understand what a comfortable retirement looks like for them and work backwards to determine what they can realistically afford to give.

“Overextending themselves can significantly impact their financial security and, in come cases, lead to a reversal where children need to support their parents later in life,” Tropoulos says.

Interestingly, while more parents are giving money, fewer are willing to downsize their homes to do so. This year, 77 per cent of parents said they wouldn’t consider downsizing to help financially.

• Advice given in this article is general in nature and is not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their own personal circumstances before making any financial decisions.

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