First home buyers taking parental freebies, borrowing more
For those with the good fortune to have parents wealthy enough to help them onto the property ladder, the Bank of Mum and Dad is becoming an increasingly friendly lender.
Not everyone has the luxury but for those with access to the Bank of Mum and Dad it seems the loan conditions are improving in a big way.
Around three quarters of parents providing financial assistance for their children to buy a home in 2025 said they do not expect to be reimbursed. This figure is a huge turnaround compared to 2021, when just a third of respondents said they did not expect to be repaid.
Almost no parents (just 3 per cent) who provided financial assistance to their children to buy property expected full repayment with interest, while 12 per cent expected to be repaid without interest.
The findings of the national Mozo survey revealed how parental support to get on the property ladder was evolving and highlighted the sense of urgency around helping first home buyers overcome huge affordability issues.
Rachel Wastell, Mozo’s personal finance expert, said that as property prices and home loan deposit sizes rise, the so-called Bank of Mum and Dad has turned into the Gift of Mum and Dad, with most parents giving financial assistance without expecting repayment.
“In 2021, a third of parents didn’t expect repayment, now it’s three quarters; that’s not a bank, or a loan, that’s a legacy,” Ms Wastell said.
“The property ladder is losing those bottom rungs and Aussie parents are stepping in to build new ones, using their own savings.”
Since March 2019, Australian house prices have skyrocketed by over 51 per cent, rising from $646,000 to $976,800 by the end of 2024. For first home buyers, that surge means that a 20 per cent home loan deposit (the amount required to avoid paying LMI) has jumped from $129,200 to $195,360 - an increase of $66,160 - in just five years.
“For many first home buyers, saving a deposit is now the biggest financial hurdle and so parents are stepping up, offering financial support to help children achieve this monumental savings task,” Ms Wastell said.
The emergence of parental support has been nothing short of phenomenal in a generation. Of those supporting their children’s home purchases today, only 12 per cent said they received such assistance when they were young.
More than 60 per cent of first home buyers in Australia now receive some form of financial assistance from their parents to buy their first home. The Bank of Mum and Dad is estimated to be collectively worth about $35 billion.
The average amount gifted for a home deposit has increased from $69,907 in 2021 to $74,040 in 2025, an increase of more than $4,000, according to Mozo.
In 2025, nearly a quarter (23 per cent) of parents allowed children to live at home rent-free while they saved for a deposit, up from just 15 per cent in 2021. But interestingly, the average cost has halved, dropping from $13,845 in 2021 to $6,227 in 2025.
“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,” Ms Wastell said.
Access to finance is one of the most significant barriers holding back more Australians from getting into housing.
The Housing Industry Association (HIA) has been vocal in advocating for governments and the Australian Prudential Regulation Authority (APRA) to consider the impact of financial regulation on housing affordability and first home buyer access to the market.
HIA Managing Director Jocelyn Martin said with home ownership rates at record low levels, all levels of governments and political parties needed to look at all options to reverse a worrying trend.
“They could start by removing the restrictions on lending that have reduced competition among banks and often limit lending only to those that already own a home.
“There also needs to be a focus on creating a regulatory system that encourages the financial system to support the needs of the Australian people, particularly first home buyers, and the offer of more flexible financial arrangements that serve the needs of both home buyers and home builders.”
Best states for first home buyers
It’s not all bad new for first home buyers.
The gap between those starting out on the property journey and existing home owners is showing signs of closing.
The First Home Buyer Mortgage Insights report released this week by Money.com.au revealed a major turning point for first-time buyers in Australia.
Annual growth in the first home buyer (FHB) loan segment is expected to outpace the broader owner occupier loan market in 2025 — with FHB loans projected to rise 6.5 per cent to 133,308. By contrast, the rest of the owner occupier market is forecast to grow by 5.3 per cent, reaching 216,210 loans.
Property expert Mansour Soltani said first home buyers are always playing catch-up with upgraders who have equity behind them but now that gap is finally starting to shrink.
“This is partly due to the uptake of state grants and the First Home Guarantee.
“With interest rates falling, we’re likely to see affordability pressures ease, borrowing power improve, and more first home buyers take their shot at homeownership in 2025.”
The insights report found that Victoria still leads the nation with the strongest annual growth in first home buyer loan numbers, recording an 11 per cent increase last year — double the national growth rate of 5.5 per cent.
“South Australia could be a market that holds a rare opportunity for first home buyers,” Mr Soltani said.
“FHB loans now make up 34.9 per cent of all owner occupier loans in SA.
“This is the highest share on record for the state.
“Because many first home buyers have already entered the South Australian market, growth is slowing and reducing the risk of competition driving up house prices.”
First home buyer investor loans continue to grow at twice the pace of FHB owner occupier loans, with annual growth of 12 per cent and 5.5 per cent respectively. New South Wales recorded the highest annual growth in first home buyer investor loans at 20.8 per cent — nearly double the national average.
The average annual non-FHB loan now sits at $698,053 — a 31 per cent premium, or $164,987 more, than the average first home buyer loan of $533,066. By the end of 2025, the average FHB loan is expected to reach around $563,000.