Bank of Mum and Dad

Australians and New Zealanders are comfortable with the Mum-and-Dad business ventures or financial dealings, so it is with some pride that we should acknowledge that we now have our own Bank of Mum and Dad (BOMAD or BoMaD).

While there has been a growing tendency for children to borrow from their parents as a strategy for securing that out-of-reach first home, COVID seems to have accelerated that practice to the point where BOMAD is the ninth largest mortgage lender in Australia.  Property prices have risen while at the same time there is a shortage in the supply of new properties which means that, unless parents come to their aid, the millennials will miss out entirely on the home property market.

 There are problems with BOMAD, in particular for Mum and Dad who could possibly lose money on the deal and risk their own homes in the process.  The increasing complexity and fluidity of family arrangements raises the risk of disputes ending in legal battles.