Research: Young Aussies hanging on to the home ownership dream

COVID-19 has changed the way Australians think about budgeting and home ownership and it’s not all bad news, according to the bi-annual Know Your Numbers* survey by leading digital bank, ubank.

ubank Executive, Philippa Watson said challenging times seem to be spurring on some positive financial behavioural changes, especially amongst younger Australians.

According to the national research, 44% of Aussie millennials list buying a property as one of their top 2 savings goals over the next 5 years – an increase of 3% since February 2020. Of those aspiring home owners, 50% said they’re currently saving for a deposit.

“Despite 45% of the population admitting their finances have been negatively impacted in the last 6 months, we’re seeing millennials emerge as being quite resilient,” said Ms Watson.

“They’re taking the opportunity to implement budgeting and saving strategies to keep their financial goals, such as buying a home, on track, with many putting away half their salary each month.”

The research found 68% of millennials have a budget, compared to 58% of Gen X and 59% of Baby Boomers, with the number falling to 55% of Gen Z. An additional 11% of Aussies said they have started utilising budgeting apps or trackers during this time, increasing to 20% of millennials.

“We know there’s a direct correlation between budgeting behaviours and reaching your financial goals, and it’s really impressive that so many younger Australians are being intentional around their money,” said Ms Watson.

“There are countless free budgeting resources available to anyone looking for some help to take control of their finances.”

Home ownership sentiment remains strong but lack of financial knowledge is a barrier to getting on the property ladder

The research also found a correlation between personal budgeting behaviours and home loan knowledge, revealing Aussies who don’t actively budget are twice as likely to feel in the dark when it comes to home loans.

Similarly, 80% of aspiring home owners feel under-educated when it comes to saving for or buying a home, this number increases to 86% for millennials – and it could end up costing them thousands of dollars.

“Owning a home is still a major goal for Aussies, especially young Australians, but our research shows some knowledge gaps that could cost borrowers thousands and add unnecessary years to the repayment process,” said Ms Watson.

“It’s not the right time for everyone, but for some, now might be a good opportunity to get on the property ladder or consider refinancing and take advantage of interest rates being at historical lows.

“Just 20 minutes of homework into comparative rates and fees could see thousands put back into Aussie pockets over the life of a home loan and help make the dream of owning a home within reach.

“We encourage anyone who is considering taking out a home loan or refinancing to get in touch. Pick up the phone or jump online and use the tools at your disposal to take the next step.”

For those looking for more information on applying for a home loan – or refinancing an existing one, here are some top home loan tips:

1. Crunch the numbers early on

• Use a borrowing calculator to check how much you can borrow
• Factor in extra costs like legal fees and stamp duty
• If you’ve found a property, know its value

2. Do your research

• Determine the reason for buying your real estate – investment or live-in? This will help shape your research in terms of home loan lender, the area you want to buy and type of property.

3. Create a budget

• Now you know where you want to buy and how much you can borrow, it’s time to save for the deposit. Put together a budget to calculate your monthly spending and how much you need to put away.

4. Don’t be afraid to shop around

• Find a lender with the best rate with the features that you need, check the comparison rate and any fees so you know exactly what you’ll be paying.
• If you have a home loan, check you’re getting the best rate, don’t be afraid to pick up the phone and call your bank and then call around.

5. Now you’re ready, be prepared for your application and know your spending

• Have your ID in order and know your income, living expenses and debts; have 3 months of bank statements ready.

6. Know the timeline – it can take longer than you think

• Contact your bank early, the process takes an average of 5 weeks for new loans.

7. Ask about lender support

• Review the bank’s website to see what processes they have for support during uncertain times so that you know what you’ll experience if you run into repayment challenges.