Gen Z cohort most likely to be stung by fees while Millennials most likely to be confused by loan products
A new survey by Money.com.au has revealed the costly mistakes first-timers make when jumping into the mortgage market, often fuelled by bad decisions, rushed choices… and listening to Mum and Dad.
Topping the list, 22% of buyers said they paid too much in loan processing and monthly fees, while 21% regretted not securing a more competitive rate.
Small rate differences can often lead to big losses, with Money.com.au noting that a borrower with a 5.7% rate on a $600,000 loan will pay over $31,000 more over 30 years than someone with a 5.5%% rate.
Gen Zs are more likely to be burned by fees, while Millennials are more likely to be confused by complex loan products. Gen X buyers, perhaps due to experience, were laser-focused on interest rates.
Six per cent of first-home buyers admitted they regret taking loan advice from their parents or family members, particularly when well-meaning relatives steer buyers towards outdated loan products, non-competitive lenders, or emotionally-driven decisions.
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Debbie Hays, mortgage expert at Money.com.au, says many new buyers jump in without shopping around, relying on the familiar rather than doing their homework.
“Many first-time home buyers apply for a loan with the first lender they come across, often their existing bank or their parents’ bank,” said Hays. “They haven’t yet built the habit of shopping around or getting advice from a broker. In that haste, they often overlook fees, loan features or whether the rate is even competitive.”
Hays explained that rushed decisions lead to high refinancing rates within the first year.
“By then, they’ve usually improved their loan-to-value ratio, gained experience with loan products and features, and become more assertive about what they want or don’t want from a lender. Many are also confident enough to haggle and push for establishment fees to be waived on their next loan.”
First-home buyers’ biggest regrets
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paying too much in loan processing and ongoing fees – 22%
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not being on a competitive interest rate – 21%
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choosing a loan without offset or redraw features – 16%
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not understanding the product they signed up for – 15%
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not using a broker or using the wrong broker – 13%
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locking in a bad fixed rate – 6%
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taking the advice of parents or family on which loan to choose – 6%
