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Owning home key to financial wellness: YFW

A report has found that home ownership is the single most important factor affecting a person’s perceived level of financial wellness.

The Your Financial Wellness (YFW) User Insights 2021 report has found a strong correlation between home ownership and perceived level of financial wellness, with an average score of 7.9 for those surveyed who own their home outright, the highest average score of any variables analysed in the report.  

On the other hand, the report – commissioned by YFW with support from Teachers Mutual Bank Limited (TMBL) – found that people renting a home returned a much lower financial wellness score than home owners (5.1).

However, the perception of financial wellness for those who transitioned from renting to home ownership has not appeared to be a linear journey.

For instance, those looking to buy their first home received an average index of 6.7, which the report said most likely could reflect the optimism of looking to buy with the safety net of a deposit.


However, once people buy their dream home, their financial wellness drops to 6.3, most likely reflecting the pressure of making loan repayments.

According to the report, a YFW index of 6.4 out of 10 represents “average” financial wellness, while scores below 5 indicate significant levels of financial stress.

Only 6 per cent of those who own their home outright reported feeling stressed, but this jumped to 48 per cent for renters.

In terms of financial goals, almost 30 per cent of the 3,000 respondents stated that buying a home was a goal for them, while almost 40 per cent listed repaying their mortgage as their top goal.

For those aged between 20 and 29, buying a home was their top goal, while for those aged between 35 and 44, the top goal was to repay their mortgage.

From the respondents surveyed, those struggling to repay debt received a YFW index of just 3.6, while those who said they were “just managing” received 4.1, and those “easily managing” jumped to 7.1.

Those with no savings received a score of 4, while those with one to two months’ savings jumped to 6.9.

Only 40 per cent of respondents said that they have less than a month’s salary in savings.

Commenting on the report, TMBL CEO Steve James said the findings are significant as they have revealed the gap in wellness and stress when comparing home owners and renters.

As such, he posited that it has presented a strong argument for both policymakers and financial institutions to promote “the true value of home ownership”, adding that it is a goal that, if fulfilled, “is most likely to lead to financial wellness”.

He said: “The findings of this important report point to the role that financial institutions must play in supporting their customers to take that much desired step into home ownership in a responsible and considered way.”

Mr James also provided some pointers for first home buyers (FHB) looking to enter the property market at a time when prices have continued to climb, stating that FHBs need to adequately prepare and save for the purchase of their first home.

“While support such as the First Home Loan Deposit Scheme (FHLDS) can provide a great help in removing the cost of lender’s mortgage insurance, it is important to remember the other additional costs that come with purchasing a property and moving, such as stamp duty, removalist fees, electricity, gas and internet connection, home and contents insurance,” he said.

“Further, your first home won’t be your home forever. It may be helpful to think about the potential resale value it has in the future. Consider things like travel distances, proximity to transport, retail and schools that may be of value when looking to sell the property down the track.”

Overall, the report found that almost half (46 per cent) of respondents said that they experienced some form of financial stress, while 51 per cent said that they sometimes worry about meeting typical monthly expenses.

[Related: More borrowers feel pinch of loan costs: NAB]

Owning home key to financial wellness: YFW
Owning home key to financial wellness: YFW

Malavika Santhebennur

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.

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