Australian parents warned falling house prices could trap loan guarantors for 14 years

Key points

• Parents who act as guarantors for a child's home loan could be tied to it for nearly 14 years if house prices fall 10 per cent, according to new Primara Research data. A guarantor is normally released once the loan balance falls to 80 per cent of the property's value.
• REA Group says prices have already dropped 3.3 per cent over six months, driven by rising interest rates and tax changes.
• Higher rates have also reduced borrowing capacity, making it harder for first-home buyers to enter the market.