Powered by MOMENTUM MEDIA
subscribe to our newsletter

Prospective borrowers struggling to grasp mortgage concepts

Almost half of prospective home buyers are unfamiliar with key mortgage terminology, according to new Westpac research.

Westpac’s latest Home Ownership Report, which involved a survey of 1,479 home owners and first home buyers (FHBs), almost half of prospective home buyers – or next home buyers (NHBs) – do not understand key mortgage concepts such as comparison rate (70 per cent), equity (49 per cent), offset account (48 per cent), or refinancing (41 per cent).

The survey revealed that only 43 per cent of respondents considered themselves “financially confident”.

However, according to Westpac’s research, 84 per cent of NHBs are taking steps to better educate themselves in preparation for a home loan, with 73 per cent turning to professionals, and 40 per cent leveraging digital resources to enhance their understanding of home-buying concepts.

“It’s encouraging to see the majority of home buyers are already making the most of available resources to get up to scratch on key home loan concepts,” Westpac’s general manager of home ownership, Will Ranken, said.

Advertisement
Advertisement

“However, more can be done to ensure Australians are fully equipped to achieve their home ownership goals.

“With the right help and guidance, the process of buying a home can be incredibly rewarding. It all starts with an open and frank conversation with a professional to identify any knowledge gaps.”

Westpac’s research also found that many NHBs are apprehensive about purchasing a home at an auction, with over half (56 per cent) claiming they are “too scared”, and 46 per cent conceding they are “not confident they know what to do”.

Mr Rankin noted the importance of preparing for the auction process, particularly in light of recent CoreLogic data, which reported a rise in the number of homes taken to auction, with clearance rates holding above 50 per cent for the first time since September 2018.

“Auctions can be daunting, but again, by doing their homework and being well-prepared, home buyers can feel confident to make the most of current opportunities,” Mr Ranken continued.

PROMOTED CONTENT


“To ensure the best chance of success, home hunters should observe several auctions before they bid, thoroughly research the property they’re interested in, and ask the selling agent for comparable sales.”

Mr Ranken also encouraged NHBs to consider the financing options available to them before committing to purchasing a property.

“A portability loan can be a great time-saver, particularly when already dealing with the emotional stress that can come with moving home,” he said.

“A bridging loan could also be an option if they want to stay in their current property while they build a new home.”

[Related: Less than a tenth of Millennials are investing in property]

Prospective borrowers struggling to grasp mortgage concepts
Couple reviewing a document
mortgagebusiness

Are you a new-to-industry broker in the process of growing your business? Then there’s some great news: The Adviser’s New Broker Academy is back in 2021 and will provide you with essential insights into cutting-edge tools, strategies and processes to fast-track to success. Don’t miss your chance to attend. To secure your FREE place, visit newbroker.com.au now!

Charbel Kadib

Charbel Kadib is the news editor on the mortgages titles at Momentum Media.

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

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

Latest News

Developers have called the government to act against a decline in apartment construction in NSW, saying it could threaten housing affordabi...

A new chief technology officer is set to join direct-to-consumer lender Tic:Toc as it ramps up capacity to meet “the surge in demand for d...

The Minister for Housing has called the building and construction ban in Victoria a “chaotic and confusing response”. ...

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

How long do you think it should take to discharge a mortgage?

Website Notifications

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