'Bank of Mum and Dad' Restricts Credit

Children are finding it much tougher to take out a loan from the "bank of Mum and Dad", AXA has said.

The insurer has released new research, showing that the credit crunch has had a similar effect on lending within the home as it has had on the high street. Matching the increasingly tough criteria being imposed by major banks to mortgage seekers, parents were found to be becoming increasingly reluctant to extend credit to their teens.

AXA said that around 38 percent of parents have taken measures to rein in their spending, as they feel the effects of the economic downturn. A total of 17 percent also said that they have reduced their loans to their children as part of this tougher budgeting - while one in ten claim to have stopped the loans altogether.

Alison Green of AXA commented: "The Bank of Mum and Dad has so far been quiet on the issue of how it will deal with the effects of the credit crunch. But now it has come out and shown teenagers have been hit hard. Over half of the teenagers we polled said their parents give them money if they run out and one in five knows they will get what they want if they are persistent enough. So there are plenty of young people who have got used to getting what they want, when they want it."

She added: "But all that may change as parents find their finances stretched to breaking point for the first time in years. Parents are getting tough and kids are not going to like it."