August 21, 2013

Fears that even more adult children will lean on parents to lend money for house deposits

Age Concern fears more adult children will now coerce their parents to lend money for house deposits following new mortgage-lending rules announced by the Reserve Bank.

The new rules from October 1 will force banks to limit mortgages to loan-to-value ratios of at least 80 per cent - requiring many first home buyers to find a 20 per cent deposit.

Age Concern’s Elder Abuse and Neglect Prevention national advisor Louise Collins says there is already an unfortunate expectation that parents are obligated to financially help out their children.

“There is nothing wrong with parents helping out their kids, if they can afford to lose the money, potentially,” she said

“Things don’t always work out and parents must realise they may not get their money back or even lose their own house if things go really bad.”

Mrs Collins said older people should have the confidence to say “no”.

She said adult children pressuring, threatening or bullying parents to lend them money was a form of psychological elder abuse, which is the most common type of elder abuse in New Zealand.

In about 80 percent cases, the abusers were related to the older person. In about half of the cases, they were adult children.

Mrs Collins said as a result it was common for older people not to report it, as they felt too embarrassed about being manipulated and taken advantage of by members of their own family.

“This is one of the reasons it stays hidden. Many older people feel ashamed their own flesh and blood is treating them badly, so they won't talk about it,” she said.

“The thing is to know you don’t have to put up with it. You can ring Age Concern for help. We know that family are very precious to older people, so we try to get a win-win result when there are difficulties with family relationships.”

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