Latest news with #BankOfMumAndDad

News.com.au
23-06-2025
- Business
- News.com.au
Calls to lift NSW stamp duty exemption limit
ANALYSIS With the NSW Budget for 2025–26 to be announced tomorrow, the government's policy decisions on housing are already locked in. But whatever is unveiled, one thing is clear: it's the bank of mum and dad that's already stepping up to support first home buyers. At Loan Market, we've seen guarantor-backed pre-approvals for first home buyers in NSW more than double in the past year. Around 11 per cent of these now involve a parent using their home as security, up from just 5 per cent a year ago. It's a clear signal: more young Australians are leaning on their families, not because they want to but because they have to. And the challenge goes well beyond house prices. Since 2020, rent in Sydney has jumped 44 per cent, while groceries have increased by 27 per cent at the checkout and other costs, like car insurance have soared by more than 40 per cent. These are everyday pressures, not luxuries, and they're making it even harder for people to save. At the same time, seasoned investors have returned to the market with confidence. At Loan Market, we've seen a 31 per cent rise in investor loans year-on-year. If the government is serious about helping first home buyers, the conversation can't stop at housing supply. Stamp duty is one of the biggest upfront costs they face and it's stopping many from even getting close. Right now, full stamp duty exemptions only apply to properties under $800,000, with partial concessions up to $1 million. That might have worked once, but those numbers don't reflect today's reality. Sydney's median house price sits at $1.46 million, according to PropTrack data. Even the median unit price is $820,000, already above the current threshold. Take a couple trying to buy their first apartment at that median price. If they tip over the $800,000 limit, they could be hit with nearly $33,000 in stamp duty. That's on top of their deposit, legal costs, and moving expenses. And if they're hoping to buy a house in Sydney? The median puts any stamp duty support completely out of reach. Some suggest buyers should just look further out. But for many with jobs in the city, family nearby, and deep community ties moving over 40 minutes away simply isn't realistic or fair. More and more, we're seeing first home buyers invest interstate instead, renting out the property while building equity. It's a smart move in tough conditions but it's also a sign of a broken system. Raising the full exemption threshold to $1.5 million, closer to real-world property prices, would make a genuine difference. Buyers would still need to pass strict lender serviceability tests, including a 3 per cent buffer. But it would ease one of the biggest barriers they face. And we can't forget the broader picture. First home buyers keep the market moving. When they step in, others can upsize, downsize or move where they need. When they're shut out, it slows everything down. Of course, not everyone has parents who can help. And even when they do, it often comes at a cost like delaying retirement, putting travel plans on hold, or shelving downsizing. That's where great brokers make a real difference. They help structure a pathway to reduce the debt and remove the guarantor as soon as it's viable. It's not about cutting corners, it's about smart, sustainable solutions. There's also a case for stamp duty exemptions or concessions to be given to retirees, as well. If empty nesters were encouraged to downsize from their large family homes, there would be more supply in the market for families looking to upsize. Greater supply in the market provides more choice and sustainability in prices. Stamp duty reform has been debated for years. The question now is whether tomorrow's budget will finally shift from talk to action. This isn't just a policy choice. It's an opportunity to back Australians who are doing everything right – working hard, saving hard, and leaning on family when there's no other option. It's time to support the parents who've been carrying the load, and the next generation trying to find their place in the market. It's time to turn intent into action. Here's hoping this budget delivers for those working hardest to get their start or for young Australians to get the same opportunities like others before them.

News.com.au
18-06-2025
- Business
- News.com.au
Where first-home buyers are snapping up 50pc of properties
Buying your first home remains a strong aspiration in Australia but the pathways into the market are constantly evolving. Some first home buyers prefer to build whilst others favour established properties. Some choose to buy their first property for investment rather than owner occupation. Many are relying on the Bank of Mum and Dad for help with the deposit. Others are taking advantage of government assistance programs like the First Home Guarantee to get on the property ladder. The latest NAB Residential Property Survey looked at first home buyer activity across the five mainland states during the March quarter. The survey showed slightly stronger first home buyer activity in the new housing market (34.2 per cent of total sales) versus the established housing market (32.8 per cent of total sales). There may be stronger interest in new housing due to First Home Owner Grants only being available for new properties. Additionally, house and land packages are attractive to first home buyers because they are usually located in more affordable suburbs on the city fringes. Across the states, new homes are most popular in Western Australia. Almost one in two (47.6 per cent) new home sales in the March quarter went to first home buyers compared to 32.2 per cent of established home sales. New homes were also more popular than established homes in NSW, Queensland and South Australia, but by a much smaller margin than in Western Australia. It's the reverse in Victoria, where first home buyers are much more interested in established homes. About 37.6 per cent of established home sales in Victoria during the March quarter went to first time buyers versus 23.8 per cent of sales in the new housing market. If we divide the data between first home buyer owner occupiers and investors, we also see some distinct trends. For example, NSW recorded the highest portion of both new home sales (15.6 per cent) and established home sales (10.3 per cent) to first time buyers purchasing for investment. What is helping many of these buyers into the market is government support — especially the First Home Guarantee, which allows eligible first home buyers to purchase with a 5 per cent deposit while the Federal Government effectively acts as guarantor on their loans. This bypasses the need for costly lenders' mortgage insurance and has opened the door for buyers who may have otherwise needed many years to save the standard 20 per cent deposit. During the election campaign, Labor promised to expand the First Home Guarantee by removing income caps for applicants, raising the existing property price limits, and providing an unlimited number of loan guarantees. While assistance schemes are making a difference, challenges remain for first time buyers. Affordability is the biggest hurdle across the board. A lack of stock has also made buying difficult, particularly in Queensland, South Australia and Western Australia. The supply crunch may be pushing more buyers to compromise on location or shift focus to building rather than buying established homes, though construction costs remain high. Despite the obstacles, property professionals expect first home buyer activity to increase in the coming year, according to the survey. Lower interest rates and the expanded First Home Guarantee will no doubt help (a start date for the expanded program is yet to be announced). Aspiring first home buyers should prepare for stronger competition in the marketplace by getting pre-approved finance and conducting all their market research as soon as possible.


Telegraph
04-06-2025
- Business
- Telegraph
The new baby boomer tax funding your children's holidays
First it was houses, now it's holidays. Today's grandparents, largely the post-war baby boomer generation, are increasingly the source of funding for almost everything in Britain. The Bank of Mum and Dad has been stumping up deposits for house purchases, particularly in London and the South East, in large numbers for a couple of decades now. House price growth has far outpaced wage rises since the 2007-08 financial crisis tanked the global economy and froze wages in real terms. The lucky recipients – myself among them – of these so-called 'gifted deposits' are now having children of their own. Once the sprogs reach school age, and your holidays are restricted to times when half the country is also off, the costs are truly astronomical – and they're getting worse. Colleagues on the Telegraph Travel desk found a return flight to Corfu from Gatwick with easyJet cost £1,300 per person during last week's half-term break. The same journey this week will set you back just £263 per person. It's no wonder growing numbers of families are instead choosing to take their kids out of school during term time and paying the fines imposed by the council for truancy. Yes, some families take the Michael, but for others, the choice is between breaking the law and having no holiday at all. And gone are the days when you could rely on a cheap break in this country, either. Even camping has gone bonkers, with bare pitches (where you bring your own tent) costing £50 a night at some campsites. So, as infantilising as it is, baby boomers are now having to fork out for their children and grandchildren's holidays, too. The truth is that this generation, now in their 60s and 70s, are the only ones with any money in Britain any more. The triple jackpot – index-linked final salary pension, full state pension and a mortgage-free property – is enjoyed by millions of people. Today's workers have wages that have stagnated, once you take into account the effects of inflation, and are labouring under the highest tax burden since the end of the Second World War. If you earn £60,000 a year, your monthly take-home pay (after tax and pensions) will be around £3,300. Take off a typical mortgage or rent, nursery fees for one child, a London travelcard, utilities and food, and you're left with little more than £200. That's simply not enough to build any kind of wealth to afford regular breaks in school holidays. At the same time as younger generations are being squeezed, the Government is coming up with more reasons for older people to give away their money more quickly than ever. For instance, from April 2027, unspent pensions will fall into the scope of inheritance tax at 40pc (assuming the £1m tax-free allowance most couples have has been used up). It is policies like this that have led pensioners to rush to spend their savings before the Treasury can get their grubby hands on it. During last week's holiday, several of the families holidaying around us were all going on the grandparent pound. There were a few nice cars outside – all owned by the retired grandparents, of course, not by their working children. Those of us lucky enough to have parents willing and able to help are very grateful, but it shouldn't be like this. Something has gone horribly wrong when grown adults are reliant on their parents for a roof and the odd jolly with their families in their own country.


Telegraph
22-05-2025
- Business
- Telegraph
The rise of mortgage-free young homeowners
There's a growing gap between Britain's homeowning haves and have-nots: whether you are tied to a mortgage. Many people work towards being mortgage-free over decades, but increasing numbers of young people are choosing cheaper properties they can own outright over borrowing their way to a bigger home. Around 37pc of households own their property outright – up 4pc over the past decade – compared to the 28pc paying off a monthly mortgage, according to the Department for Work and Pensions. Between favourable mortgage rates during Covid and the 'great wealth transfer' (the passing of trillions from baby boomers to their Gen X or millennial children), the number of those who can lay total claim to their property is on the up. It's surprising, perhaps, given that 20- and 30-somethings are well behind prior generations when it comes to home ownership, with the average age of those first getting their foot on the property ladder rising to the age of 33. But the Bank of Mum and Dad is proving to be a saviour. Half of all first-time purchases last year were secured via parental cash, amounting to some £9.6bn, according to recent figures from Savills. Jo Eccles, founder of prime central London buying agency Eccord, says that the Bank of Mum and Dad now accounts for almost a third of all homes under £5m that her firm sells. 'Upcoming changes to the way pensions are taxed are prompting parents to gift much larger sums to children and grandchildren for property purchases – often buying the property outright rather than just gifting a deposit, like they used to,' she explains. 'Shifting regulations mean that parents are keen to pass on significant family wealth early.' Of a string of recent sales they have managed, she says that 'in every case, the parents themselves were only in their 60s or early 70s, giving themselves a good chance of beating the seven-year rule'. This is where no inheritance tax is payable on gifts if the donor lives for seven years after passing them on. Among the grateful recipients is Ruby Ennis*. The 21-year-old is soon to move into a £435,000 one-bed flat in Fulham, south-west London. Due to the commission-based structure of her income from her job in property, she had a salary too low to get a mortgage by herself. When she raised the issue with her family, her father and grandfather duly stepped in, paying for the property outright between them in what was 'basically an early inheritance', she says. Their generosity means Ennis – who has been living for free with her family in London – is 12 years younger than the average UK homebuyer, and has no mortgage to repay. She had never discussed the idea of being gifted a large sum by her family beforehand – let alone for a property. In her mind, 'it was always a back-up option, though it wasn't ideal'. However, her family was quickly on board: 'I told them about the opportunity and they were very happy to help out.' Part of the reason is that they, like her, share the view that 'renting is absolutely ridiculous,' Ennis says. 'If you can buy a property, then why would you want to rent? I think it's just putting money completely down the drain.' The cost of renting in England has risen by 9pc over the past year, according to the Office for National Statistics (ONS). 'It's unreasonable to think someone in their 20s could buy a home' Nathan Xu had a similar conversation with his own parents. In a bid to combat ever-rising rental prices in London, which last month hit a monthly average of £2,243, per the ONS, the 27-year-old solutions engineer 'asked for their advice, and we figured out that if we purchased a flat rather than renting a room, that would help me to save a lot of money'. Last February, he completed on a £450,000 new-build flat at Berkeley's Heron Wharf in Poplar, east London, overlooking the River Lea. He decided against purchasing where he had been living in Elephant and Castle, in the south of the city, as 'during night time, there was a lot of noise – ambulances and people screaming on the street'. He bought off-plan, helping to reduce costs since these properties are typically offered below purchase price as developers look to secure capital. The amenities in his complex – a lounge, gym and club – as well as the neat décor, were among the selling points of a home he plans to stay in for the next five years. For those who can, he says, 'it's a wise decision to get a flat, rather than rent'. While mortgages are still for most considered a given, Sonya Matharu-Coxill, who runs the Mortgage Atelier, says that among those seeking out their first home, there has been 'a quiet evolution in buyer mindset. We're witnessing a generational reset in how people think about debt and homeownership', she believes. She adds: 'These buyers have grown up through multiple financial shocks, from the 2008 crisis to the pandemic and now the cost of living crisis, so their relationship with borrowing is more cautious, even if they're financially capable.' During the period of ultra-low interest rates, borrowing to the max had clear appeal. But 'there's been a huge psychological shift, especially after many homeowners found themselves unprepared for the sharp rise in rates when their fixed terms ended. That sudden jump in monthly payments came as a real shock, and it's left a lasting impression', she says. This includes younger buyers looking to enter the property market for the first time. 'They're building in buffers, prioritising resilience, and focusing on long-term flexibility rather than maxing out what they can borrow.' Eccles adds that, with prenups and cohabitation agreements far more socially acceptable than before, these are typically now put in place 'to protect the money if the child's relationship breaks down. As a result, parents feel more comfortable making a substantial gift while the child is only in their 20s or 30s.' For Ennis, the next few years of homeownership are set – she plans to 'put a lot of love' into her new place, and then resell in a couple of years, at what she hopes will be profit enough to shimmy her further up the property ladder. Among her friends, who mostly live at home rent-free, discussions are already being had about how their parents might contribute to future purchases. Is it realistic that any 20- or 30-somethings can afford to buy without a generous donation from the parental coffers? 'No, not at all… it's super, super rare from someone just working in their 20s that they're going to be able to buy something without a massive mortgage, without help from mum and dad,' she says. 'It's unreasonable to think you'd be able to get on the property in your 20s without help from family.'


The Independent
09-05-2025
- Business
- The Independent
How the bank of mum and dad is changing the housing market
UK Finance analysis reveals that "the bank of mum and dad" significantly impacts the UK housing market, enabling first-time buyers to purchase properties earlier and at higher prices. Assisted buyers enter the market around age 30 with an average household income of £56,000, purchasing homes worth almost £40,000 more than unassisted buyers, who have a higher average income but buy about 2.5 years later. The average deposit for assisted buyers is £118,073 compared to £60,741 for unassisted buyers, with an even greater disparity in London. The temporary stamp duty holiday disproportionately benefited assisted buyers, with increased equity withdrawals suggesting families leveraged property wealth to help first-time buyers. UK Finance warns that increasing reliance on family support risks deepening inequalities in the housing market, emphasising the need for solutions addressing both supply and affordability.