One in five first home buyers don't know banks can act independently on interest rates: survey

The financial literacy of some first home buyers (FHBs) is a matter of concern, according to a recent survey.

According to Mortgage Choice’s annual First Home Buyer Survey, 18.3% of first time buyers didn’t know banks can move rates independently of the central bank.

"It is clear there is more work to be done to help improve the financial literacy of Australians. Anyone planning to get their foot on the property ladder needs to understand the role and power financial institutions have on the rise and fall of interest rates,” said Mortgage Choice chief executive John Flavell.

“Buying property is one of the biggest financial commitments a person will ever make, so future first home buyers need to know exactly what they are getting themselves in for when taking on a mortgage."

The survey also found the majority of potential first time buyers are concerned about rates rising independently of the Reserve Bank, with more than half (57.5%) of Australians surveyed planning to purchase property in the next two years "very concerned" or "somewhat concerned" about lenders moving interest rates independently of decisions made by the central bank.

Many lenders, including the Big Four -- Westpac, CBA, NAB, ANZ -- lifted their variable rates independently of the RBA in October by an average of 18 basis points.

One basis point is one-hundredth of a percentage point.

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