New research from National Australia Bank (NAB)-owned fintech UBank has revealed that 84 per cent of those who are yet to purchase property said that they require more knowledge about financial products such as home loans, rates and deposits.
The UBank biannual Know Your Numbers survey found that when it came to financial terms, 40 per cent of respondents said that they had little to no knowledge about loan-to-value ratios (LVR) or knowing what the term means, rising to 70 per cent of Gen Z (those under 24 years old).
The respondents also reported having little to no knowledge on lender’s mortgage insurance (LMI) (41 per cent), offset accounts (38 per cent) and negative gearing (37 per cent).
Additionally, the survey of 1,031 respondents (18 years and older) by YouGov Galaxy found that only 24 per cent said that they know a lot about comparison rates, while only 10 per cent said they have a “perfect understanding”, according to UBank.
Only 31 per cent of respondents said that they know a lot about refinancing, while 12 per cent said that they have a perfect understanding.
Commenting on the survey findings, UBank CEO Philippa Watson said the figures have come amid high appetite for home ownership, with 56 per cent of respondents saying that they are excited about the prospect of owning a home, which she said was up 13 per cent since July last year.
“But knowledge is key, and entering the property market with little to no knowledge of some essential financial terms and concepts could see Australians falling into common traps or getting themselves into situations they cannot manage,” Ms Watson said.
However, she noted that while the knowledge gap is evident among aspiring home owners, the pandemic has spurred many respondents to improve their financial awareness.
“Many customers come to us in search of ways to simplify their finances, particularly after the events of the past year,” said Ms Watson.
“One of the ways we can help them is to debunk the very common misconception that finance has to be complicated, because we truly believe every Australian should have the ability to understand and manage their finances.”
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Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.
Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.