The pace of house price growth is prompting more parents or other family members to put their assets on the line by guaranteeing home loans taken out by first home buyers, new figures show.

National Australia Bank says the proportion of first home buyers signing up for loans with the bank who have the backing of a family member has lifted to 6.7 per cent from 4.8 per cent in 2010.

National Australia Bank says the proportion of first home buyers signing up for loans who have the backing of their family has lifted to 6.7 per cent from 4.8 per cent in 2010. Credit:Jeffrey Chan

The practice allows first home buyers with relatively small deposits to secure a loan and is often also used to avoid the cost of mortgage insurance.

However, it comes with risks for the family member who agrees to be a guarantor, as it means their assets are, ultimately, on the line for the portion of the loan they have guaranteed.