Gateway uncovers the state of Australians’ financial literacy, with only 39% of mortgage holders definitely understanding the concept of a ‘split’ home loan.
It was excellent to work with Gateway Credit Union, one of Australia’s leading Credit Unions committed to educating consumers on financial literacy. Our joint study has revealed some interesting figures around the financial literacy of Australians.
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.
“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.” Mark McCrindle.
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’.
This infographic focuses on the most commonly misunderstood banking terms, and also provides consumers with easy to understand explanations of each of these features.
This research in the media