Gateway uncovers the state of Australians’ financial literacy, with only 39% of mortgage holders definitely understanding the concept of a ‘split’ home loan.
Sydney, Australia - One of Australia’s leading Credit Unions committed to educating consumers on financial literacy has revealed some worrying figures from a joint study it completed with McCrindle Pty Ltd.
As a mutual financial institution, Gateway is invested in educating Australians to make informed decisions when it comes to their finances. Despite the majority of mortgages spanning a 30 year period, the research highlights that your everyday mortgage holder does not truly understand a number of the features and loan facilities that are available to them.
The misunderstandings around some of the most commonly used banking terms spurred Gateway to consider how they could provide assistance to consumers, as well as brokers who play a large role in the education process.
“When buying a home, Australians get into the biggest debt of their life to make the biggest purchase of their life. This research shows more than a third of mortgage holders do not understand basic mortgage terms such as split home loans, redraw facilities and offset accounts. While every mortgage advertisement will display a comparison rate, only 1 in 3 mortgage holders know what this is. It is encouraging to see that the understanding of the new generation of home buyers, Generation Y, was greater than that of the older generation, highlighting an increase in financial literacy amongst the emerging generation” said Mark McCrindle, Principal of McCrindle Pty Ltd.
The study revealed that the financial terms least understood by mortgage holders are a ‘split’ home loan and the difference between ‘interest rate’ and ‘comparison rate’. Only 39% of those surveyed confirmed that they definitely understood what a ‘split’ home loan was. Similarly, only 35% of mortgage holders definitely understand the difference between ‘interest rate’ and a ‘comparison rate’.
“As a mutual, it is our goal to build consumer knowledge, so that buyers are confident when it comes to choosing the right home loan product” said Paul Thomas, Chief Executive Officer at Gateway Credit Union.
To work on providing consumers with greater awareness, Gateway has released an infographic that focuses on the most commonly misunderstood banking terms. The infographic also provides consumers with easy to understand explanations of each of these features. This is just the first step, among many for Gateway that aims to create greater financial literacy among the Australian population.
Lenders like Gateway have created a variety of home loan packages that give consumers greater financial flexibility. Products have been designed to give mortgage holders access to facilities that can help them balance risk and create financial safety nets, as well as the potential to reduce the interest paid over the life of their loan. By becoming more aware of these features, consumers will benefit by finding a loan that fits their needs.
To get a copy of the infographic, visit Gateway's website: https://gatewaycu.com.au/australians_financial_literacy.aspx
About Gateway Credit Union
As a leading Australian Credit Union, Gateway Credit Union has been proudly looking after Australians and their family’s banking needs for sixty years. Today Gateway Credit Union remains as focused as ever on providing real choice and value to financially help people achieve their hopes and dreams, be it buying their own home or building their wealth to retire comfortably.
Synonymous with trust, value and personal service, while an ADI, unlike the ‘big banks’, Gateway Credit Union is fully owned by its Members and every Member is a customer with one equal share. This means everyone benefits equally from the commitment to exceptional service and great value. Everyone can join Gateway and everyone should, so to find out more visit www.gatewaycu.com.au