Owning home key to financial wellness: YFW

One report found that home ownership is the single most important factor affecting an individual’s perceived financial wellbeing.

Your Financial Wellness (YFW) User Insights 2021 report found a strong correlation between home ownership and perceived financial wellbeing, with an average score of 7.9 for those who own their home directly, the highest average score of any variables analyzed in the Report.

On the flip side, the report commissioned by YFW with the assistance of Teachers Mutual Bank Limited (TMBL) found that people who rent a home have much lower financial wellbeing scores than homeowners (5.1).

However, the perception of financial wellbeing for those who have transitioned from renting to home ownership does not seem to be a linear path.

For example, those looking to buy their first home were given an average index of 6.7, which the report said could most likely reflect optimism about buying with the safety net of a deposit.

However, once people buy their dream home, their financial health drops to 6.3, most likely due to loan repayment pressures.

According to the report, a YFW index of 6.4 out of 10 represents “average” financial wellbeing, while values ​​below 5 indicate significant financial burdens.

Only 6 percent of homeowners said they felt stressed, but that number rose to 48 percent for tenants.

When it comes to financial goals, nearly 30 percent of 3,000 respondents said buying a home was their goal, while nearly 40 percent said paying back their mortgage was their number one goal.

For the 20 to 29 year olds, buying a home was the top priority, for the 35 to 44 year olds the repayment of the mortgage.

Of the respondents surveyed, those who struggled to repay their debts got a YFW index of just 3.6, while those who said they “only manage” got 4.1 and those who “manage easily.” “jumped to 7.1.

Those with no savings got a score of 4, while those with a month or two of savings rose to 6.9.

Only 40 percent of respondents said they had less than a month’s salary in savings.

Commenting on the report, TMBL CEO Steve James said the results are significant as they reveal the wellness and stress gap when comparing homeowners and tenants.

Therefore, he noted that “promoting the real value of home ownership” is a strong argument for both policy makers and financial institutions, adding that it is an objective that, if met, is “most likely leads to financial well-being ”. .

He said, “The findings of this important report highlight the role financial institutions must play in helping their customers take the responsible, thoughtful step into their homes.”

Mr James also gave some advice to first-time home buyers (FHB) looking to get into the real estate market at a time when prices have continued to rise, explaining that FHBs need to prepare appropriately to buy their first home and save up .

“While a grant like the First Home Loan Deposit Scheme (FHLDS) can be of great help in eliminating the cost of mortgage insurance from the lender, it is important to remember the other additional costs involved in purchasing a property and related to the move, such as moving fees, electricity, gas and internet access, home contents and household contents insurance, ”he said.

“Besides, your first home won’t be your home forever. It can be helpful to think about the potential resale value it has in the future. Take into account things like the distances, proximity to transportation, retail and schools, which can be of value if you decide to sell the property later. “

Overall, the report found that nearly half (46 percent) of respondents said they experienced some form of financial stress, while 51 percent said they sometimes worry about meeting typical monthly expenses.

[Related: More borrowers feel pinch of loan costs: NAB]

Home ownership as the key to financial health: YFW

Mortgage business

Last updated: July 28, 2021 Published: July 29, 2021

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Malavika Santhebennonly

Malavika Santhebennonly

Malavika Santhebennur is the features editor for mortgage titles at Momentum Media.

Prior to joining the team in 2019, Malavika held positions at Money Management and Benchmark Media. She has been writing about financial services for six years.

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