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Aussie home owners brushing up on Home Loans 101

23 April 2019

  • Westpac’s latest Home Ownership Report shows eight in ten (84%) Next Home Buyers(NHBs) are taking steps to better educate themselves on home financing
  • Almost half of NHBs do not exactly understand some key home financial concepts, such as ‘equity’ (49%) or an ‘offset account’ (48%)
  • Over half (56%) of NHBs admit they are too scared to purchase at auction

New findings from the latest Westpac Home Ownership Report reveals eight in ten (84%) Next Home Buyers1 (NHBs) are taking steps to better educate themselves on home financing in preparation for their home ownership journey.

This group is turning to professionals (73%) and leveraging digital resources (40%) to better understand what is involved with buying or financing a home, and 43 per cent consider themselves financially confident.

However, the report, which surveyed over 1,000 Australian home owners, identified education gaps amongst Next Home Buyers, including:

  • Almost half (49%) of NHBs did not know exactly what equity is
  • Almost half (48%) of NHBs did not know exactly what an offset account is
  • 41 per cent of NHBs did not know exactly what refinancing is

Will Ranken, Westpac’s General Manager of Home Ownership, encourages all buyers, no matter where they are on their home ownership journey, to continue to stay informed.

“It’s encouraging to see the majority of home buyers are already making the most of available resources to get up to scratch on key home loan concepts. However, more can be done to ensure Australians are fully equipped to achieve their home ownership goals,” commented Mr Ranken.

“With the right help and guidance, the process of buying a home can be incredibly rewarding. It all starts with an open and frank conversation with a professional to identify any knowledge gaps. A Westpac Home Finance Manager can help guide home buyers through the process and offer tailored advice to suit their individual needs, and online resources are also available to explain key concepts.”

Westpac’s research also reveals that many NHBs are apprehensive to purchase at an auction with over half (56%) admitting they are too scared, and 46 per cent not confident they know what to do.

While auction numbers have declined over the last year against a softening market, the latest figures show an uplift in the number of homes taken to auction, with clearance rates holding above 50 per cent for the first time since September 20182.

“Auctions can be daunting, but again, by doing their homework and being well-prepared, home buyers can feel confident to make the most of current opportunities,” continued Mr Ranken.

“To ensure the best chance of success, home hunters should observe several auctions before they bid; thoroughly research the property they’re interested in; and ask the selling agent for comparable sales."

Mr Ranken added it’s also important buyers do research to understand other loan services available to prospective buyers, such as a bridging loan or portability loan.

“A portability loan can be a great time-saver, particularly when already dealing with the emotional stress that can come with moving home. A bridging loan could also be an option if they want to stay in their current property while they build a new home.”

Glossary for next home buyers

Appraised value
Appraised value is the estimate of the value of a property which is being used as security for a loan.

100% offset
If this option is available on your home loan, it means that the money you have in your transaction account acts the same as if it was in your mortgage account – it reduces the balance of your loan on which interest is calculated, which in turn reduces your interest repayments allowing you to pay your loan off sooner.

Bridging loan
A bridging loan lets you finance the purchased of a new home while your current property sells. It is usually a short-term loan (usually up to 12 months) that is closed when your existing property is sold. The size of the bridging loan is calculated on the available equity in your current home.

Comparison rates
A comparison rate is designed to help you understand the overall cost of a loan based on several relevant factors, rather than just the interest rate. Each comparison rate accounts for the amount of the loan, loan term, repayment frequency, interest rate and fees and charges.

Equity indicates your financial interest in a property or business enterprise, e.g. your equity in your house is the difference between its value and the amount you owe on the house.

Loan portability is a feature that could be available on your home loan, enabling you to ‘take your home loan with you’ when you move to another property. This means you could save the cost and inconvenience of having to establish a new loan, or refinancing, if you decide to move.

Principal is the amount of the loan upon which interest is calculated and charged.

Refinancing is the process of taking out a new mortgage to repay an existing loan. There are a number of reasons you may want to refinance your home loan, for example, to shorten your loan term and reduce repayments so you can own your home sooner.

Media contacts:

Emalie McPherson

M. 0481 915 557


Mary-Louise Dare

T. 0434 699 605


Notes to editors:

About the research
The research was commissioned by Westpac and conducted by Lonergan Research in accordance with the ISO 20252 standard. Lonergan Research surveyed 1,479 Home Owners and First Home Buyers. Surveys were distributed throughout Australia including both capital city and non-capital city areas. After interviewing, data was weighted to the latest population estimates sourced from the Australian Bureau of Statistics. A house-related action is defined as renovating, selling a home, downsizing, buying a home, buying an investment property or upsizing.

Key trends and findings

Financial Literacy

  • Eight in ten (84%) NHBs are taking steps to better educate themselves on home financing
  • Seven out of ten (70%) NHBs did not know exactly what comparison rates are
  • Almost half (49%) of NHBs did not know exactly what equity is
  • Almost half (48%) of NHBs did not know exactly what an offset account is
  • 41% of NHBs do not know exactly what refinancing is


  • Over half (56%) of NHBs admitting they are too scared to buy at an auction
  • 46 per cent of NHBs are not confident they know what to do

1 Next Home Buyers (NHBs) are defined as Home Owner-Occupiers who are either considering, or prioritising, buying a home, upsizing or downsizing.
2 Core Logic Report, 18 Feb 2019