A new report just released by the Australian financial services company Credit Union Australia (CUA) has revealed the impact interest rate movements continue to have on Australian mortgage holders.
CUA’s National Mortgage Survey was undertaken during January of this year and it questioned over 1,000 respondents aged between 25 and 49 (approximately of which half currently hold a mortgage) on a number of home loan and mortgage related topics.
Some of the survey responses make for enlightened reading while others are surprising and more than a little unusual.
Following we have presented some of the survey’s most interesting findings:
Making Or Thinking Of A Change
The National Mortgage Survey found that 42% of mortgage holders have switched their lender or considered doing so in the previous six months, which is a noticeable rise up from the 31% that was similarly recorded back in May 2015.
Within the finer details of their situation, the issue of interest rates was highlighted as being the major factor when borrowers consider changing their loan conditions from variable to fixed rate, with the prospect of an overall 0.5% reduction of rate paid back enough to motivate 75% of borrowers to make or consider a switch from variable to fixed rate conditions.
I’m Paying How Much?
One surprising result to arise from the survey was that a total of 60% of respondents did not know the exact rate of interest that they were currently paying on their home loans.
The survey found that 28% of borrowers were not sure of the rate that they were currently paying and a further 32% only had an approximate idea of the figure that they are required to repay.
Further analysis of this lack of observation reveals that men are most likely to be aware of their borrowing conditions with just under 50% surveyed being aware, while women came in at a concerning figure of less than 33%.
In terms of income brackets and awareness, higher earners were shown to be more likely to be aware of their loan conditions than those on lower incomes.
Paying Up Ahead Of Time
Despite the apparent lack of knowledge of the day to day operations of their mortgages many borrowers are of the belief that they will be able to pay off their principle sum before their loan life reaches its conclusion.
25% of respondents to the survey were expecting to pay off their loans in under a 10 year period while 40% of respondents are of the belief that they will pay off their loans within a 10 to 20 year period.
Additional Findings Of The Survey
CUA’s National Mortgage Survey also made a number of other findings which are of interest, including:
33% of the survey’s respondents believe that interest rates will rise by the middle of 2016.
The number of respondents aged between the years of 25 and 29 and who were considering taking out a mortgage fell from 41% to 27% when compared to 2015 survey figures.
43% of respondents indicated that they would be prepared to work an extra three hours a day if it allowed them to take a year off of their overall mortgage repayments.
Comment From Credit Union Australia (CUA)
Credit Union Australia’s Head of Product Mark Petty noted that more mortgage holders and potential borrowers were looking to improve their loan agreements and related terms when compared to 2015.
Mr Petty also reminded borrowers that while the primary interest rate attached to their loans is of major importance, other areas such as charges, fees and loan features should also be viewed and considered when attempting to attain best mortgage repayment performance.
In relation to the lack of intimate knowledge shown by borrowers in regards to their exact mortgage payments, Mr Petty expressed surprise that important details attached to such an important asset and financial investment in people’s lives could be so widely overlooked.