First-home owners inspired to save by economic turmoil: Mortgage Choice

The recent financial turmoil appears to have played most heavily on the minds of first-home owners, according to a new survey commissioned by Mortgage Choice.

Two-thirds of first-home owners reported increasing their savings over late August and early September – soon after global share markets dived over overseas debt fears – the 2011 Saving & Spending Insights Survey found.

Investors were not far behind when it came to saving for future unforeseen circumstances, with 63% creating a bigger buffer followed 57% of home buyers and 56% of “investor/home buyers”.

Overall, 83% of the 1,009 mortgage holders surveyed said they had saved money in the past year, with repaying the mortgage more quickly (45% of respondents) the second biggest reason after saving for a holiday (53%).

More than a third (37%) said they were saving for unexpected changes to their finances.

The survey found that a quarter of respondents were putting aside more than 20% of their after-tax income, almost double the current household savings rate of around 10.5%.

“It’s uplifting to see that despite facing a hefty interest rate increase last November, rising living costs and a flood levy, the vast majority of Australians with a mortgage managed to save money over the past 12 months in addition to meeting their repayments,” says Mortgage Choice spokeswoman Kristy Sheppard.

“Recent turbulence in financial markets is clearly influencing borrower attitudes to saving, but although they recognise the need to save for a rainy day, letting their hair down with some time away from work is even more important.”

Remarkably, about 34% of borrowers do not know their interest rate, with first homeowners the most likely to not know (39%).