Australian families are fundamentally changing how they help their adult children enter the property market. New research reveals that 75% of parents who provide financial assistance now offer outright gifts rather than family loans, representing a dramatic shift from just 33% in 2021.
This transformation coincides with families pouring $2.7 billion into the property market over the past year. The Bank of Mum and Dad has become so significant that if it were a financial institution, it would rank between the fifth and ninth largest mortgage lenders in the country.
The Great Australian Family Finance Shift
The numbers reflect more than financial pragmatism, they signal a generational evolution. Kate Browne, head of research at Compare Club, summarises the trend: “We’re seeing a fundamental shift in how younger Australians are entering the property market. What was once structured as a family loan is increasingly becoming a one-way financial gift.”
This is set against a backdrop of continued property price inflation. National dwelling values have risen 51% since March 2019, reaching a median of $976,800 by late 2024. This means that providing a 20% deposit now requires close to $200,000, more than what many first-time buyers can save, even with dual incomes.
The generosity parents now show is unprecedented. In 2025, 55% of parents said they had never received comparable help when purchasing their own homes, further underscoring how rising costs have altered expectations and family roles.
The sources of these funds remain varied. Most parents rely on savings (54%), followed by current income (29%), and spending reductions (19%). However, significant personal sacrifices are less common. Just 23% would consider downsizing to help their children, down sharply from 45% in 2021.
Why Parents Are Opening Their Wallets Wider Than Ever
The affordability gap is not just anecdotal. A 20% deposit on the median dwelling now costs $195,360, an increase of $66,160 in just five years. This financial leap makes homeownership unattainable without external help for many Australians, particularly younger cohorts already contending with wage stagnation and rising living costs.
Compare Club data shows that one in five parents have already given or lent over $75,000 to assist with property purchases. A further 46% are actively considering similar actions.
Mortgage servicing costs have also become steeper. Based on average interest rates and loan terms, a single-income buyer must now earn at least $149,000 annually to afford repayments on a $976,800 property. This figure far exceeds the national median income, putting further strain on aspiring homeowners.
Case studies underscore the shift. The Johnson family, for example, initially intended to provide a structured family loan to help their daughter Emma purchase a first home. But after financial consultation, they opted to gift $80,000 outright.
“We realised that calling it a loan but not really expecting repayment was just creating potential future problems,” said Mrs Johnson. “The gift approach felt more honest and removed a financial burden from Emma’s shoulders.”
When Family Generosity Goes Wrong
While gifts may seem simpler, the line between a gift and a loan is legally significant. One of the most high-profile examples remains the Carpenter v Carpenter case, where a father contributed $200,000 to his son and daughter-in-law. The absence of formal documentation led to a dispute following the couple’s separation, and the court ultimately ruled the money was a gift, leaving the father unable to reclaim the funds.
Family law specialist Sarah Henderson explains: “For a financial agreement to be binding, it needs proper legal documentation. Many informal arrangements fail due to a lack of legal advice or clearly stated terms.”
Even in genuine gifting scenarios, banks and lenders often require signed gift letters to confirm that funds are not expected to be repaid. These documents become especially important when applying for mortgages or navigating legal proceedings during separations.
Without proper records, family contributions can be pulled into complex property settlements, resulting in lengthy legal disputes and financial losses. Families that opt for a formalfamily loan arrangement should always ensure legal contracts are in place, with clearly stated repayment terms, interest rates, and consequences for default.
How to Structure Family Financial Assistance
- Gifting a Deposit
This is the simplest and most popular method. A larger deposit allows buyers to avoid Lenders Mortgage Insurance and access more favourable loan terms. However, gifting without documentation can cause Centrelink issues or confusion in estate planning. - Formal Family Loans
A family loan agreement offers clarity and structure. These can include repayment schedules, interest charges, and conditions like what happens in case of relationship breakdowns. Proper legal documentation is critical. - Acting as a Guarantor
Guarantor loans enable children to borrow more by leveraging parental equity. While effective, this method exposes parents to financial liability if their children default. - Joint Ownership or Co-Buying
Parents and children co-purchasing property is becoming more common. While this offers shared equity, it also introduces tax implications, title complexities, and challenges when it comes to resale or refinancing.
Financial adviser Michael Chen warns: “Parents must ensure their retirement isn’t compromised. Professional legal and tax advice is non-negotiable when structuring these arrangements.”
For families with more than one child, equitable treatment becomes a consideration. Although 83% of parents say they aim to help their children equally, 29% admit they assess whether helping one child now might limit their ability to support others in the future.
Beyond the Bank of Mum and Dad: Alternative Solutions
- Family Home Guarantee: This federal program allows eligible single parents or guardians to purchase homes with as little as a 2% deposit and no LMI.
- Shared Equity Schemes: State and federal governments are increasingly trialling shared equity initiatives where they co-purchase homes alongside first home buyers. Private lenders and superannuation-backed investors are also entering the space.
- Professional Co-Investment: Platforms are emerging that connect buyers with professional investors who contribute equity in exchange for a future stake in the property.
- Structured Lending Platforms: Companies like CashPal are also reshaping access to short-term and personal loans. While not a substitute for large-scale home finance, these services can help families meet urgent or transitional financial needs.
Protecting Family Relationships
Financial assistance between family members is emotionally charged. It blends practical needs with unspoken expectations. According to behavioural economist Dr Rachel Thompson, “Financial assistance between generations involves complex emotional dynamics. Clear agreements and honest conversations are essential for preserving family harmony.”
She notes that unspoken assumptions, such as whether the money must be repaid or how it affects inheritance, can lead to long-term resentment. Families are advised to discuss financial plans openly, including:
- Whether support will be equal for all children
- How assistance will affect estate planning
- What happens if the child separates from a partner
- How and when any loans should be repaid
Dr Thompson also advises parents to assess their own long-term security first. “The best gift many parents can offer their children is to avoid becoming a financial burden later in life.”
Family meetings and written agreements are practical tools for clarifying expectations and minimising conflict.
The Future of Family Finance
As homeownership remains out of reach for many young Australians, the family loan or gift will continue to play a vital role in bridging the affordability gap. Yet the trend toward gifting raises broader questions about access and equity.
Young Australians without parental support face increasing difficulty entering the market, deepening socioeconomic divides. While the Bank of Mum and Dad is growing in influence, it highlights the urgent need for broader policy solutions that address housing affordability for all.
Families considering financial assistance must weigh generosity against long-term security. Whether through a formal family loan, a lump-sum gift, or alternative strategies, transparency and proper documentation are key.
As this landscape evolves, platforms like CashPal provide valuable tools for families navigating these complex decisions, ensuring that financial assistance strengthens, rather than strains, family ties.