The Times Australia
The Times World News

.

Young homeowners are more likely to use their home as an ‘ATM’ than their Boomer parents. Here’s why

  • Written by Rachel Ong ViforJ, ARC Future Fellow & Professor of Economics, Curtin University

For many Australians, the family home is their largest financial asset. With an increasing variety of ways to tap into home equity, the temptation to access this wealth is ever growing.

Homeowners increase the debt owed on their home when they borrow against their equity[1]. Standard mortgage home loans now provide facilities for relatively cheap or free withdrawals of equity from the home.

This turns the home into an ATM[2], which borrowers can access when they choose.

Our new study[3] asks what motivates Australians to tap into their home equity, and how does this behaviour change with age?

Surprisingly, despite having much lower housing equity levels, younger homeowners borrow often, and borrow more, than their Boomer parents.

How common is equity borrowing?

Using 15 years of data from the government-funded Household, Income and Labour Dynamics in Australia [4](HILDA) survey, we tracked the mortgage debt and repayments of homeowners aged 35 and over.

The chart below shows younger owners are far more likely to engage in equity borrowing.

In 2006, nearly 39% of the youngest homeowners, aged 35–44, borrowed against their home equity. By 2021, this number had dropped to 29%. Despite the decline, it’s still 24 percentage points more common than those aged 65 and over. The older group has remained steady at about 5% over the years.

How much do equity borrowers withdraw from their home?

Among those who use their home like an ATM, younger borrowers now withdraw larger amounts than older borrowers.

In 2006–07, equity borrowers aged 35–44 and 45–54 withdrew on average $43,000 and $57,000, respectively (expressed in real values set at 2022 price levels). By 2021, the amount withdrawn by these two age groups had climbed to $70,000 and $100,000.

On the other hand, the amount withdrawn by borrowers aged 55 or older fell from more than $50,000 to less than $40,000.

What motivates equity borrowing?

Young homeowners’ equity borrowing behaviours are sensitive to changes in house prices and debt values, and their financial risk preferences. Among those aged 35–44, a $10,000 increase in the primary home value raises the likelihood of equity borrowing by ten percentage points.

Every $10,000 in debt against the primary home reduces the likelihood by 2.8% percentage points. Those willing to take substantial financial risk are eight percentage points more likely to borrow against their home than those who are risk-averse.

Those aged 65+ are not inclined to borrow, and exhibit little change in equity borrowing behaviour with variations in asset, debt, income or financial risk preferences.

Why borrowing practices differ between age groups

As well as being more likely than older homeowners to borrow against equity, the younger group also withdraws higher amounts than their Boomer parents.

This is despite younger borrowers already carrying much higher debt against their primary home. Among those in our study who engaged in equity borrowing in 2021, the median debt before borrowing was $401,000 for 35-44 year-olds compared to $0 for those aged 65+.

As real house prices have risen over decades, the current generation of young homeowners has had to invest more money into purchasing their first home than previous generations.

It’s therefore not surprising the primary home is now widely viewed as a financial resource to be tapped into to meet spending needs[5].

On the other hand, most Baby Boomers bought their first home at more affordable prices than their children, and at lower levels of debt. Now they don’t appear to be spending their kids’ inheritance by drawing down housing wealth.

In fact, older parents may shy away from equity borrowing to bequeath wealth to children[6]. Some also dislike passing debt[7] on to their children.

Older people may also avoid equity borrowing due to concerns about aged care costs[8]. Some may be hampered by poor financial literacy[9].

More debt ahead without policy changes

Present trends suggest young homeowners will remain indebted for longer periods, and more and more will retire with mortgage debt[10].

For indebted retirees, there are real prospects of drawing down of superannuation[11] to pay off mortgages in retirement.

This may impose extra burdens on the age pension system. Another unwelcome consequence, which may add to health costs, is the prospect of debt-related psychological distress[12] among those who can’t pay off their mortgage in old age.

If the current trends continue, the great wealth transfer[13] that has already begun looks set to further entrench inequality[14] between those who have access to the bank of mum and dad and those who do not.

Encouraging older people to use their housing equity to fund their needs in old age may lighten fiscal burdens on younger generations. But policy reforms will be needed to relieve concerns about the risks of equity borrowing in old age.

References

  1. ^ equity (doi.org)
  2. ^ home into an ATM (theconversation.com)
  3. ^ study (doi.org)
  4. ^ Household, Income and Labour Dynamics in Australia (melbourneinstitute.unimelb.edu.au)
  5. ^ tapped into to meet spending needs (theconversation.com)
  6. ^ bequeath wealth to children (www.pc.gov.au)
  7. ^ dislike passing debt (doi.org)
  8. ^ aged care costs (treasury.gov.au)
  9. ^ poor financial literacy (doi.org)
  10. ^ retire with mortgage debt (theconversation.com)
  11. ^ drawing down of superannuation (theconversation.com)
  12. ^ debt-related psychological distress (www.ahuri.edu.au)
  13. ^ great wealth transfer (www.afr.com)
  14. ^ further entrench inequality (theconversation.com)

Read more https://theconversation.com/young-homeowners-are-more-likely-to-use-their-home-as-an-atm-than-their-boomer-parents-heres-why-238924

Times Magazine

Headless CMS in Digital Twins and 3D Product Experiences

Image by freepik As the metaverse becomes more advanced and accessible, it's clear that multiple sectors will use digital twins and 3D product experiences to visualize, connect, and streamline efforts better. A digital twin is a virtual replica of ...

The Decline of Hyper-Casual: How Mid-Core Mobile Games Took Over in 2025

In recent years, the mobile gaming landscape has undergone a significant transformation, with mid-core mobile games emerging as the dominant force in app stores by 2025. This shift is underpinned by changing user habits and evolving monetization tr...

Understanding ITIL 4 and PRINCE2 Project Management Synergy

Key Highlights ITIL 4 focuses on IT service management, emphasising continual improvement and value creation through modern digital transformation approaches. PRINCE2 project management supports systematic planning and execution of projects wit...

What AI Adoption Means for the Future of Workplace Risk Management

Image by freepik As industrial operations become more complex and fast-paced, the risks faced by workers and employers alike continue to grow. Traditional safety models—reliant on manual oversight, reactive investigations, and standardised checklist...

From Beach Bops to Alpine Anthems: Your Sonos Survival Guide for a Long Weekend Escape

Alright, fellow adventurers and relaxation enthusiasts! So, you've packed your bags, charged your devices, and mentally prepared for that glorious King's Birthday long weekend. But hold on, are you really ready? Because a true long weekend warrior kn...

Effective Commercial Pest Control Solutions for a Safer Workplace

Keeping a workplace clean, safe, and free from pests is essential for maintaining productivity, protecting employee health, and upholding a company's reputation. Pests pose health risks, can cause structural damage, and can lead to serious legal an...

The Times Features

The Role of Your GP in Creating a Chronic Disease Management Plan That Works

Living with a long-term condition, whether that is diabetes, asthma, arthritis or heart disease, means making hundreds of small decisions every day. You plan your diet against m...

Troubleshooting Flickering Lights: A Comprehensive Guide for Homeowners

Image by rawpixel.com on Freepik Effectively addressing flickering lights in your home is more than just a matter of convenience; it's a pivotal aspect of both home safety and en...

My shins hurt after running. Could it be shin splints?

If you’ve started running for the first time, started again after a break, or your workout is more intense, you might have felt it. A dull, nagging ache down your shins after...

Metal Roof Replacement Cost Per Square Metre in 2025: A Comprehensive Guide for Australian Homeowners

In recent years, the trend of installing metal roofs has surged across Australia. With their reputation for being both robust and visually appealing, it's easy to understand thei...

Why You’re Always Adjusting Your Bra — and What to Do Instead

Image by freepik It starts with a gentle tug, then a subtle shift, and before you know it, you're adjusting your bra again — in the middle of work, at dinner, even on the couch. I...

How to Tell If Your Eyes Are Working Harder Than They Should Be

Image by freepik Most of us take our vision for granted—until it starts to let us down. Whether it's squinting at your phone, rubbing your eyes at the end of the day, or feeling ...