UBank research finds millennials are implementing new saving strategies in response to financial uncertainty, but still feel uninformed when it comes to home loans
25 September 2020, Sydney Australia – 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. UBank offers an innovative tool called Free2Spend which calculates a daily spending amount based around your real time outgoings and savings goals.”
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. UBank, for example, is offering its lowest interest rates ever.
“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.
- Try our Free2Spend budgeting tool on the UBank app to track income against spending. UBank USpend customers can set a savings goal and the tool will adjust your spending budget based on that goal.
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.
For more information or to use Free2Spend as a UBank customer, go to https://www.ubank.com.au/free2spend.
Free2Spend is available on iOS (10+) and can be downloaded from the App Store today via the UBank app.
UBank was launched in 2008 and was developed and is supported by NAB. UBank is a fintech and provides simpler, better, smarter banking for its customers online and over the phone. UBank is a division of NAB and currently offers a range of products including competitive home loans, online savings and transaction accounts, and Term Deposits. © National Australia Bank Limited ABN 12 004 044 937 AFSL and Australian Credit Licence 230686.
Any advice has been prepared without taking into account your objectives, financial situation or needs. Before acting on any advice, you should consider whether it is right for you. We recommend that you read and consider the relevant product Terms and Conditions and our Financial Services Guide available at ubank.com.au before making any decision in relation to our products. Credit criteria and fees and charges can apply.
Our deposit, savings and term deposit accounts are issued by UBank, a division of NAB. For our home loan products, the credit provider is AFSH Nominees Pty Ltd ABN 51 143 937 437 Australian Credit Licence 391192. UBank is the mortgage manager for our home loan products.
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* UBank Know Your Numbers Index data conducted and compiled by YouGov Galaxy with 1,065 Australians, 18 years and older over 17-19 July 2020