A major digital bank has released data suggesting that as many as 84% of Australians who do not own their homes are in the dark about finance.
UBank’s Know Your Numbers report found that Australians outside of the property ladder thought that they needed to learn more about home loans, rates, house deposits and other financial products before they were able to take the next step towards owning their own homes.
More than 50% of respondents did not know what a loan-to-value ration was, with 70% of Gen Z not understanding the term. Other common jargon, such as LMI, offset accounts and negative gearing were also poorly understood.
“UBank has a number of initiatives designed to make learning about finance fun and less intimidating,” said Philippa Watson, UBank CEO. “Each month we promote a series of articles across our website and social channels aimed at encouraging young people, in particular, to take control of their money by getting to grips with things like comparison rates, renting vs. buying, saving for a car etc.”
“We’ve also just teamed up with the guys from the She’s On The Money financial podcast to create a three part quiz explaining some of the finance terms that our research tells us are not widely understood.”
According to Wilson, brokers can play a vital role in ensuring that their clients are up to speed with the ins and outs of finance.
“I think brokers already play a huge role in educating their customers,” she said. “We do know that people often don’t call out when they don’t understand a financial term so, proactively explaining the terms and acronyms associated with home loans could be a good additional practice.”
The pandemic has forced many to learn about finance more actively. “Many people have had their finances impacted by COVID, particularly young people in industries like hospitality and travel,” said Watson. “Knowledge is power when it comes to getting on top of your financial situation and encouragingly, we’re seeing that this demographic is wanting to learn more.”
