bank of mum and dad

PHOTO: Mum and dads are providing $22.6 billion worth of help, more than Kiwibank and TSB combined. FILE

The so-called ‘bank of mum and dad’ is now New Zealand’s fifth-largest home loan lender, Consumer NZ has found.

The consumer watchdog says parents are handing out $22 billion-worth of loans to help their children get on the property ladder.

The dream of owning your first home is a dream that can be difficult to achieve.

“It feels like you’ve got to be a millionaire to just own a home, which seems quite out of reach,” one Wellingtonian said.

“I don’t think I’ll be able to manage everything all by myself, so I need support.”

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That support is needed now more than ever. In 2002, the average house price in New Zealand was $186,000 – six times the average income of $29,000 a year.

Today the median house price has risen to $890,000, which equates to more than 15 times the median income of $56,000 a year.

Consumer NZ’s Gemma Rasmussen said the bank of mum and dad is stepping in to help.

“The bank of mum and dad is in fact the fifth-biggest lender when it comes to owner-occupier loans. Approximately 15 percent of families have helped out their children.”

That’s $22.6 billion-worth of help, to be exact – more than Kiwibank and TSB combined.

“Fifty percent of people who’ve bought a property have had assistance from their family.”

That assistance has a flow-on effect as more buyers are able to pour more cash into housing.