Australia is a nation of “tightwads” that are looking to make savings on items such as clothing and travel rather than “major life purchases”, such as home loans, according to new research.
The University of Technology Sydney asked 1,000 Australians about their spending and saving habits on behalf of Heritage Bank in October 2016. The overarching conclusion was that many Australians are looking to save on items that provide instant gratification, such as clothes and travel, rather than long-term purchases such as home loans.
Indeed, the research found that more than three-quarters of Australians (76 per cent) said they limit their spending to hunt out the best deals, and that more than half (55 per cent) had changed service provider for a cheaper deal.
However, while a third of respondents said they had changed their home loan to save money and more than two-thirds of respondents (67 per cent) recognised the importance of doing so, nearly a third of Australians thought that switching home loans was “too much trouble” and said home loans were the hardest category of item to compare.
This perceived difficulty was found to be the primary barrier to consumers finding the best deal in home loans, with 28 per cent of people saying the cost of switching mortgages was “not worth the time and effort”.
Despite this, the research found that those who had switched their home loan provider saved up to $3,000 a year each, collectively saving an estimated $717 million a year.
Dr Eugene Chan, researcher at the University of Technology Sydney, commented: “We’re definitely seeing a trend in Aussies wanting to be more savvy with their finances, however, Australians are more concerned about saving money on purchases that bring them ‘instant' gratification.
“What is interesting to see is that tightwads, who are typically very rational in their spending, are looking to make savings on the things they connect with emotionally, like clothing and travel, over major life purchases such as a home loan.”
Mr Chan added: “The attitude of many Australians today to ‘live in the now’ is also reflected in the belief that switching on major investments is confusing, time-consuming and not worth the effort.”
Speaking for Heritage Bank, Jane Calder, general manager for marketing, said that those “penny pinching” in the “wrong areas” could be losing out on savings and “jeopardising their long-term financial security as a result”.
Ms Calder commented: “It’s surprising to see that much of the nation believe switching will cost them money when in reality they could be saving significant amounts to put towards the things they enjoy most in life.
“With confusion also a major barrier to switching, we have made the process as easy as possible with a simple online application form and will continue to improve our products to offer customers the best possible deal.”
[Related: AFG explains new iSelect mortgage deal]
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