Borrowers’ dilemma: balancing cost-savings and ethics in choosing their lender

A study by Greater Bank shows that Australians are facing a dilemma in prioritising ethics or cost-savings when choosing their lender.

The research found that while 92% of home loan borrowers would prefer lenders with a high standard of business ethics, environmental commitments, and social and community values, around 78% said they find it challenging to balance these values and going for those with the best rate.

Great Southern Bank chief customer office Megan Keleher said in a rising rate environment, it is “understandable” that many households are seeking out the lender that can provide the best rate and loan product.

“While there’s a perception that choosing a green or ethical lender is more expensive, research has found this is not necessarily the case — lenders with strong values can also provide excellent rates, reduced or no fees, and longer-term value, meaning borrowers don’t have to compromise on choosing a bank that aligns to their values,” she said.

The study showed that 94% of those who are refinancing or are still planning to cite rising rates and increasing cost of living as a motivation.

Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers. Scroll down to read the rest of the article or click here.

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Refinancing

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Lender	Home Loan	Interest Rate	Comparison Rate*	Monthly Repayment	Repayment type	Rate Type	Offset	Redraw	Ongoing Fees	Upfront Fees	Max LVR	Lump Sum Repayment	Extra Repayments	Split Loan Option	Tags	Features	Link	Compare	Promoted Product	Disclosure
loans.com.au	loans.com.au Variable Home Loan P&I <90%	5.29% p.a.	5.33% p.a.	$2,773	Principal & Interest	Variable			$0	$530	90%				Owner Occupier Variable Principal & Interest 10% Min Deposit Redraw Extra Repayments More details	Available for purchase or refinance, min 10% deposit needed to qualify. No application, ongoing monthly or annual fees. Dedicated loan specialist throughout the loan application.	Go to site	Compare	Promoted	Disclosure
Unloan	Unloan Variable Rate Home Loan LVR < 80%	5.19% p.a.	5.10% p.a.	$2,742	Principal & Interest	Variable			$0	$0	80%				Built and funded by CommBank Owner Occupier Variable Principal & Interest 20% Min Deposit Redraw More details	A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.	Go to site	Compare		Disclosure
loans.com.au	loans.com.au Variable Home Loan with Offset P&I <90%	5.39% p.a.	5.43% p.a.	$2,805	Principal & Interest	Variable			$0	$530	90%				Owner Occupier Variable Principal & Interest 10% Min Deposit Offset Redraw Extra Repayments More details	Available for purchase or refinance, min 10% deposit needed to qualify. No application, ongoing monthly or annual fees. Quick and easy online application process.	Go to site	Compare	Promoted	Disclosure

Borrowers’ priorities when choosing a lender

According to the study, the top five priorities of borrowers outside cost-savings when choosing their lender are:

• Business ethics, social and community values
• Customer service and support
• More loan features
• Environmental actions and targets
• User-friendly technology

Ms Keleher said first-home buyers, investors, or refinancers who would like to know their lenders’ ethics must reach out to their brokers or to their lenders to ease their dilemma.

“You may be pleasantly surprised to realise there are responsible banks out there that are able to also provide cost savings on loans,” she said.

“A number of Australian banks and home loan providers have committed to ethical business practices and environmental targets in recent years.”

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