New research by ME (previously ME Bank) has revealed that the majority of Australians under 30 admit that they barely understand the mortgage market, which makes them vulnerable to bad real estate deals.
Of the surveyed young adults, only 15% said they were “confident” about their knowledge in finding the right home loan for themselves.
Overall, including older generations, 41% of Australians believe they have a fair grasp of the mortgage market.
Patrick Nolan, the mortgage lender’s head of home loans, said that he was “amazed” by the lack of knowledge among Aussies on basic home loan features, according to The New Daily.
“We were particularly surprised that older generations of Australians – those who typically have more exposure to home loans – have low levels of home loan literacy. Only 43% of 30 to 49 year olds and 51% of those aged 50 and over were confident with their home loan choices, far lower than anticipated,” he was quoted as saying.
“Financial literacy is valuable asset and one of the biggest money savers over time – it pays to be informed.”
The report also showed even gloomier findings, where a whopping 42% of the respondents were unable to state that the current cash rate is at 2%. Thirty-seven per cent are not aware of how the cash rate affects mortgage rates in the country, while 10% thought it was “irrelevant”.
Moreover, a majority or 55% said they had no understanding of an offset facility, while 40% had no understanding of a redraw facility. Twenty-six per cent are not knowledgeable about extra repayments and 38% do not understand interest-only repayments.
It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan