Powered by MOMENTUM MEDIA
Powered by MOMENTUM MEDIA
subscribe to our newsletter
Aussies struggling to grasp mortgage jargon

Aussies struggling to grasp mortgage jargon

New research has identified gaps in Australians’ knowledge of mortgage terminology.

A national survey of 1,006 Australians, commissioned by home loan provider State Custodians, has revealed that one in five Aussies (21 per cent) admitted they did not understand 11 key mortgage terms.

Respondents were asked to define the terms “principal”, “interest”, “refinancing”, “line of credit”, “redraw facility”, “offset account”, “comparison rate”, “lenders mortgage insurance”, “bridging loan”, “split loan” and “portability”.

Advertisement
Advertisement

Of the respondents, only 6 per cent said they understood all 11 terms, with the most commonly understood terms being interest (68 per cent), principal (48 per cent), refinancing (48 per cent), line of credit (44 per cent)  and redraw facility (43 per cent).

Fewer respondents could define the terms offset account (36 per cent), comparison rate (36 per cent), lenders mortgage insurance (33 per cent) and bridging loan (32 per cent). Only 20 per cent understood the term split loan.

Moreover, women were less likely to understand the terms, with 25 per cent admitting they were not familiar with any of the terms, compared to 17 per cent of men.

Younger respondents, aged 35 and under, were also more likely to struggle, with only 29 per cent stating they understood the meaning of the term principal, compared to 54 per cent of Australians aged over 35.

“Understanding financial terms can sometimes feel intimidating,” State Custodians general manager Joanna Pretty said.

“The more you make time to research some of the terms, the more confident you will be going through the process of acquiring or renewing your home loan.

“The best advice would be to read up a bit before you contact a lender and seek out a lender who speaks in honest and simple terms.”

 [Related: ASIC highlights financial literacy progress]

Aussies struggling to grasp mortgage jargon
mortgagebusiness

Charbel Kadib

Charbel Kadib is a journalist on the mortgages titles at Momentum Media.

Before joining the team in 2017, Charbel held roles with public relations agency Fifty Acres, and the Department of Communications and the Arts.

Charbel graduated from the University of Notre Dame Australia with a Bachelor of Arts (Politics & Journalism).

You can email Charbel on: This email address is being protected from spambots. You need JavaScript enabled to view it.

 

Latest News

Three more lenders have announced cuts to their interest rate floors for home loan serviceability assessments in response to APRA’s new gu...

Mortgage-holders are wasting approximately $4.2 billion annually in “unnecessary” interest costs, according to new research. ...

Property price declines have wiped approximately $5.5 billion in revenue from state government budgets, according to a new analysis from Moo...

FROM THE WEB
podcast

LATEST PODCAST: New banks and bank CEOs

Do you think the banking royal commission recommendations could negatively impact competition in the mortgage market?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.