A joint study by Gateway Credit Union and McCrindle Pty Ltd show the state of Australians’ financial literacy isn’t quite up to scratch, with only 39% of mortgage holders definitely understanding the concept of a ‘split’ home loan.
The research found some of the most commonly used banking terms are being misunderstood by mortgage holders, with the concept of a ‘split’ home loan and the difference between ‘interest rate’ and ‘comparison rate’ being least understood.
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’.
“When buying a home, Australians get into the biggest debt of their life to make the biggest purchase of their life,” said Mark McCrindle, Principal of McCrindle Pty Ltd.
“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.”
“As a mutual, it is our goal to build consumer knowledge, so that buyers are confident when it comes to choosing the right home loan product” said Paul Thomas, chief executive at Gateway Credit Union.