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The majority of borrowers are more likely to remain with their lender if they invest in environmental and social programs, according to new research.
The findings were revealed in the new People & Planet Report 2024 authored by Broker Pulse, the lending insights division of Agile Market Intelligence and sponsored by Beyond Bank, P&N Bank, and People First Bank.
The report aimed to explore the attitudes, perceptions, and priorities of Australian consumers and mortgage brokers on the evolving role of social and environmental considerations in residential mortgage lending.
The consumer survey – fielded by Lightspeed Australia – received a usable sample of over 2,000 responses (including 680 who have an existing home loan). The broker survey – which was fielded by the Broker Pulse panel at Agile Market Intelligence – received a usable sample of 477 mortgage and finance brokers.
More than a third of home owners (34 per cent) said they are more likely to stay with their current lender for the life of their home loan if they demonstrate strong engagement with and investment in environmental and social initiatives.
An additional 18 per cent said they were significantly more likely to maintain their relationship under these conditions.
“The results of the survey highlight the importance of social and environmental practices, with a majority of homeowners indicating their inclination to stay with lenders that invest in these programs,” the report said.
Gen Z home owners are particularly passionate about these programs, with 46 per cent saying they highly value lenders’ commitment to them.
As part of the survey, consumers were asked if they were likely to refinance their mortgage if their social and environmental priorities and values did not align with their current lender.
Almost one in five (18 per cent) home owners said they were considering refinancing within the next few years, the survey found.
This suggests that despite high levels of loyalty, a lack of positive experiences or differences in values could drive mortgage holders to seek a new lender, the report said.
Almost an equal proportion (17 per cent) said they were likely to refinance in the next six months while 16 per cent were likely to do so in the next 12 months.
On the other hand, almost half (49 per cent) of the home owners surveyed expressed their loyalty to their current lender, saying they have no plans to refinance their mortgage. This illustrates positive experiences and satisfaction with their current lender.
This could also correlate with the findings that the majority of home owners (67 per cent) were satisfied or extremely satisfied with their home loan experiences, while only 8 per cent were dissatisfied.
The results also showed that younger generations are more actively exploring their options with other lenders, while older generations prefer to stay with their current lender long-term.
For example, 37 per cent of Gen Z home owners said they are likely to refinance in the next six months if their social and environmental values do not align with their lender, compared to 18 per cent of Millennials, 9 per cent of Gen X, and just 3 per cent of Baby Boomers.
The younger cohort was also the most dissatisfied with their home loan experience, which may have contributed to their desire to switch lenders. Indeed, 7 per cent of Gen Z reported feeling extremely dissatisfied compared to 1 per cent of Millennials, 3 per cent of Gen X, and 4 per cent of Baby Boomers.
Looking at trends over the longer term, one-fifth of Gen Z, Millennials, and Gen X said they are likely to refinance in the next few years, compared to only 7 per cent of Baby Boomers.
“This highlights a diverse consumer relationship,” the report said.
“While many are content with their existing lenders, there remains a proportion that is exploring other options, potentially driven by the search for better terms or services aligning more closely with their evolving needs and values.”
Brokers have simultaneously been recognising the rising importance of social and environmental considerations among their clients.
According to the survey, 37 per cent reported at least one client requesting to refinance their loan to a different lender due to their values and support for environmental, social, or community issues.
To read the inaugural People & Planet Report 2024 in full, click here.
[Related: Client loyalty greater if lenders make positive impact: Brokers]
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