Almost a third of first homebuyers choose to take out a mortgage with the institution that they do their everyday banking with, according to the latest Mortgage Choice's Recent First Homeowner Survey.
The survey of 803 Australians who had bought their first home in the past two years found that 32% of respondents failed to shop around, basing their choice of lender on whoever they banked with at the time.
“The fact that almost one in every three respondents chose their home loan lender in part due to their banking history and/or the ‘security’ of using a major lender shows how far smaller lenders need to go to match up to the big banks in many consumers’ eyes, let alone surpass them,” said Sheppard.
“It’s a shame, as there are plenty of times when lesser-known lenders offer a superior deal. Borrowers could very well be missing out on a more affordable loan that has features better suited to them.”
A quarter of respondents didn’t know what interest rate they were paying and 19% had taken on significant extra debt within two years of buying their home, up from 15% last year.
This additional debt was made up of vehicle purchases (49%), renovations (23%), credit cards (20%), furniture (18%) and electrical appliances or white goods (16%).
“What surprised me the most was finding out that so many had racked up substantial extra debt within a short time after buying,” said Mortgage Choice spokesperson Kristy Sheppard.
“We can only hope they have factored this into their budget and are paying it off as quickly as possible.”
Inability to meet repayments meant that 8% of respondents were considering selling their home, a further 8% would consider selling if the interest rate rose by 1%, 0.6% were in the process of selling and 0.6% had already sold.
“These results go a long way to demonstrating how mortgage stress is very often caused by the additional debt people commit to after they take out their mortgage,” said Sheppard.
“Getting the mortgage is not the end goal of home ownership, it is the beginning of a long journey of budget management. Celebrate buying your own property, yes, but protect yourself from losing it.”