Home Economics

Investor education has been identified as a key issue facing the financial services industry yet when it comes to home loans consumers, it seems, are no fools with one in two (49.8%) aware of the exact rate of interest they are paying on their loan.

The findings stem from a CoreData survey of almost 350 individuals with home loans, which also revealed 34.2% of people indicating they know the rate of interest they are paying to the nearest half of a percent.

Despite this, the above chart does not mean education is only an issue in this instance for the one in six (16%) of people who are unaware of the specific rate of interest they are paying on their loan.

After all, the chart doesn’t pick up on whether consumers are fully aware of all of the fees and charges they are exposed to by having the loan.

Nonetheless, this retailisation and apparent commoditisation of the home loan market has some implications for the broader financial services industry.

With regard to the superannuation and investment management industry, the increasing move towards greater transparency over fees and charges means that people won’t just be discussing the metropolitan property markets and interest rates at dinner parties and barbeques in future.

Dinner party chit-chat is likely to expand to cover superannuation administration charges, fund manager expense ratios, and investment manager performance and financial advice charges.