Bank Of Mum And Dad In Australia

The Bank Of Mum & Dad – Australia’s 10th Largest Lender in 2025 & What Families Need to Know About It

Quick Summary

The Bank of Mum and Dad has been officially recognised as the nation’s 10th largest source of housing finance, with 59% of under 30s now receiving financial assistance from parents and average contributions exceeding $112,000. This article unpacks what’s driving this trend, the risks and how to avoid them.

Table Of Contents

• How Big is the Bank of Mum and Dad
• Why Are Parents Funding Property Purchases
• The Hidden Risks Of Being The Bank Of Mum & Dad
• Structuring Support The Smart Way
• Case Study – A Northern Beaches Family
• What Financial Planners Recommend
• Final Thoughts
• Frequently Asked Questions (FAQ)

While discussions on this topic are often framed as a feel-good tale of parents helping their kids onto the property ladder, the reality is more complex. Behind the headlines are questions of fairness, retirement security, family conflict, and tax implications.

At Manly Financial Services, we’re seeing more families in Sydney’s Northern Beaches grappling with this issue than ever before and we’ve written this article to help parental generosity build wealth and minimise the chances of it backfiring.

How Big is the Bank of Mum & Dad in 2025?

The numbers are staggering:

• 59% of under 30s now receive financial assistance from parents to buy a property, compared with just 3% in 2010
• The average parental contribution now exceeds $112,000, according to data reported by the ABC
• Collectively, the Bank of Mum and Dad is lending more than $35 billion a year, placing it in the top tier of housing lenders in Australia

In Sydney’s property market,  where a median house now costs more than $1.6 million, with Northern Beaches suburbs like Manly, Freshwater, and Dee Why regularly well above $2 million, it’s easy to see why younger buyers are turning to parents for help.

Why Are Parents Funding Property Purchases

1. Housing Affordability Crisis

Despite slower growth in 2023–24, Sydney property remains out of reach for most young buyers without assistance. Saving a 20% deposit on a $1.5 million property means $300,000 upfront, nearly impossible while paying high rents .

2. Emotional Drive to Help Children

For many parents, helping their kids into property feels like the most meaningful legacy they can leave. It’s tangible, it’s immediate, and it gives kids a foothold in a market that’s increasingly exclusive.

3. Intergenerational Wealth Transfer Already Underway

The Great Wealth Transfer, which is the $3.5 – $5.4 trillion shift from Baby Boomers to younger generations, is happening faster than many expect. Instead of waiting until inheritance, families are bringing forward wealth transfers while parents are still alive.

The Hidden Risks Of Being The Bank Of Mum & Dad

Helping your children is admirable, but without proper planning it can create financial and emotional risks.

Risk 1 – Jeopardising Your Retirement

Many Baby Boomers and Gen X parents are dipping into superannuation savings, redrawing mortgages, or selling investments to fund their children’s property deposits. The danger is that you can’t replace that money once you’ve given it away .

Risk 2 – Family Conflict & Sibling Disputes

What happens if one child gets help, but another doesn’t? Or if help is structured as a “loan” but repayments aren’t clear? Without planning, parental generosity can spark resentment between siblings and even trigger legal disputes over wills.

Risk 3 – Relationship Breakdowns

If you help your child buy a property and their relationship later breaks down, your money may end up split in a divorce settlement .

Risk 4 – Tax and Centrelink Implications

Large gifts can affect:

• Centrelink Age Pension entitlements (gifting rules apply if you give away more than $10,000 a year)
• Tax liabilities if parents liquidate investments to free up cash
• Capital Gains Tax if property or shares are sold to fund the contribution

Structuring Support The Smart Way

Rather than a handshake agreement, families should treat the Bank of Mum and Dad like a serious financial institution.

• Outright Gifts – simplest, but fairness issues and Centrelink impacts
• Interest-Free or Low-Interest Loans – with formal loan agreements to protect against disputes
• Joint Ownership or Family Trusts – protect contributions and estate fairness
• Guarantor Arrangements – reduce deposit needs but expose parents to risk if repayments default

Case Study – A Northern Beaches Family

Take the example of a Manly couple in their early 60s. Their daughter wanted to buy a $2.1 million townhouse in Balgowlah but was short on the 20% deposit.

The parents considered selling shares worth $200,000 to cover the shortfall. After reviewing the plan with a financial adviser, they instead:

• Structured the support as a formal family loan, secured against the property
• Adjusted their retirement plan so superannuation contributions remained on track
• Updated their wills to reflect fairness for other children

The outcome was their daughter bought the property, the parents’ retirement wasn’t jeopardised, and family harmony was preserved.

What Financial Planners Recommend

Helping children into the property market is rarely just about the money, it’s about maintaining fairness between siblings, ensuring you are not creating additional financial stress for your children and protecting your retirement

Here are the five key steps we guide clients through when it comes to Bank of Mum and Dad lending:

1. Assess Retirement Needs First

Before giving or lending money, we model how much you’ll need to live comfortably in retirement. For example, will gifting $200,000 now mean you have to downsize earlier than planned? Will it compromise the lifestyle you’ve worked hard for? By stress testing your retirement cash flow, you see the long-term consequences of your generosity before making commitments.

2. Consider Legal Structures

Too often, parental contributions are made informally. Without agreements in place, money can disappear in disputes or divorce settlements. We work alongside legal professionals to put in place formal loan agreements, security on the property title, or trust structures. These protect your funds, clarify expectations, and reduce the risk of family conflict later.

3. Review Tax and Centrelink Impacts

Generosity can have unintended consequences. Selling shares or property to free up cash may trigger Capital Gains Tax. Large gifts can reduce Age Pension eligibility due to Centrelink’s gifting rules. Even acting as guarantor can increase your own financial exposure. Ensuring you understand the tax and social security implications of each option will help ensure there are no surprises.

4. Align Estate Planning

Helping one child today may create fairness issues with other children later. If you provide a large deposit for one child, will your will or estate plan balance this out for siblings? Should the gift be recorded as an early inheritance? Ensuring your estate plan reflects your wishes, minimises disputes, and maintains family harmony.

5. Balance Generosity With Security

The best outcomes occur when parents can help without compromising their own security. That may mean structuring part of the support as a loan instead of a gift, or contributing less than your children hope for so you can preserve your independence. Getting this balance right is rarely a straightforward process, and can have a very significant impact on the outcomes, so we’d encourage you reach out to qualified advisors.

Final Thoughts

The Bank of Mum and Dad is no longer just a family matter, it’s reshaping Australia’s property market and retirement landscape.

If you’re considering helping your children into the property market, do it with a clear strategy. At Manly Financial Services, we work with families across the Northern Beaches and greater Sydney to ensure generosity builds legacies, not regrets.

 

Frequently Asked Questions (FAQ)

 

Important Disclaimer: The information provided in this article is general in nature and does not constitute financial advice. Please consult with a qualified financial advisor to discuss your individual circumstances before making any decisions.

References:

 

• Productivity Commission: Wealth Transfers and Their Economic Effects (2021)
• The Australian: Generational Wealth Distribution
• Australian Bureau Of Statistics: Household Income and Wealth, Australia
• News.com.au: Boomers Cautious About Financially Supporting Their Children
• Grant Thornton: Preparing the next generation for Australia’s largest wealth transition
• AFR: 7 revealing charts about wealth in Australia
• Springer Nature: The Bank of Mum & Dad – intergenerational transfers and first-time homeownership in Australia
• The Guardian: The bank of mum and dad is making the Australian dream of home ownership come true – for some
• ABC: Bank of Mum and Dad increasingly used for mortgage repayments, living expenses