A report from loanDepot shows millennials and Gen Zers are looking to mom and dad to be their banks, specifically when it comes time for them to buy their first homes.
LoanDepot’s data showed that 77% of millennials and Gen Zers are turning to—or more aptly leaning on—their parents for financial assistance in securing their first mortgage. Of that 77%, 25% of survey participants who claimed to not be presently interested in buying their first home, claimed that they would definitely be more apt to consider taking the leap if their parents did indeed offer financial assistance for them to qualify.
Such data may not be surprising to many, but what may be unexpected is the percentage of Boomer generation parents that were surveyed who seem amenable to the hopes and expectations for financial assistance from their offspring. Sixty-five percent of the parents surveyed who were above age 39 stated that they would be more than willing to assist their progeny in purchasing their first homes.
However, such a generous showing of monetary support may come at a high price for these parents. One cost of this showing of support is that many of these parents will be forced to push back their retirements far beyond the dates of what they initially had planned. In fact, the survey revealed that 18% of the parents who were open to the idea of helping their children purchase first homes were indeed facing placing their retirements on hold if they did so.
Currently, the average “help” that a child would need—or expects—includes help with a down payment, co-signing the mortgage, and helping with closing costs. Although these statistics seem to offer depressing news, John Bianchi, loanDepot's EVP offers a silver lining, pointing to the opportunity it provides to guide Millennials and Gen Zers on how to navigate the arena of modern mortgage basics, then offering another idea.
"I think that what this data points to is that the desire to own a home of your own has not changed over generations, but what has changed significantly are the array of loan options available today, both in loan types and down payment requirements. loanDepot, for example, offers multiple programs that do not require a deep cash outlay to get into a home, which can help Millennials get into their first home—and prevent their parents from digging into their savings or retirement funds,” Bianchi said.