Consumers lack basic home loan knowledge: survey

by Julia Corderoy24 Feb 2016
The head of third party at non-major lender ME says it is surprising how many Australian consumers don’t understand basic home loan features.

In ME’s Savings Intentions and Behaviours Report, just 13% of consumers said they utilised a home loan offset account to help them achieve their savings goals in the six months to December 2015. This also decreased slightly from the same time the year before, when 14% of consumers said they took advantage of an offset account. 

ME general manager, broker Lino Pelaccia said that more than half of respondents admitted that they don’t even fully understand the concept of a home loan offset account – a fact he finds surprising.  

“It’s surprising more Australian’s don’t understand common home loan features that could help them save them money,” he told Australian Broker.

“Offset accounts could save borrowers thousands over the life of the loan, yet less than half (45%) of the population has a full understanding of them, according to ME research.”

Pelaccia says reveals an area where brokers should be stepping up to the plate in terms of financial literacy and education. 

“Brokers have a critical role in helping borrowers understand home loan terminology, types and features. There are plenty of independent websites out there that help borrowers learn the basic jargon and crunch the numbers, but brokers can help answer all those other unanswered questions,” Pelaccia told Australian Broker.

“A satisfied customer will be one with a solid level of home loan literacy, which gives them the confidence to choose the right loan with the right features based on their individual circumstances.”