The usage and understanding of Australian household mortgages

Andrew C. Worthington (Department of Accounting, Finance and Economics, Griffith University, Brisbane, Australia)

International Journal of Housing Markets and Analysis

ISSN: 1753-8270

Publication date: 2 October 2009



The purpose of this paper is to establish the profile of mortgage‐holding households in terms of their demographic, socioeconomic, and financial characteristics and assess the current state of knowledge concerning mortgage products in Australia.


Logit models predict owner‐occupied, investor mortgages, and mortgage understanding. Factors include financial literacy, gender, age, ethnicity, occupation, education, family structure, household income, savings, and debt. Understanding is knowledge of mortgage rates, fees and charges, and familiarity with mortgage terms.


Middle‐aged and couples with children have an increased likelihood of an owner‐occupied mortgage, while being from a non‐English speaking background, a small business owner, or a skilled tradesman increases the likelihood of an investor mortgage. Understanding is generally poorer for females, rural/regional households and the young, and better for professionals, the university‐educated, and small business owners and skilled tradesmen.

Research limitations/implications

The cross‐section of households is from a period when mortgage rates were stable and housing prices strong.

Practical implications

No more than 40 per cent of mortgage‐holding households have an understanding of any key mortgage terms, only 35 per cent understand the main disadvantage of fixed over variable rates during falls in interest rates, and just 15 per cent understand the fees and charges on their own mortgage. There is a need for financial literacy programmes to continue and expand.


This is the first Australian study to model the demand and understanding of mortgage products using household level data.



Worthington, A. (2009), "The usage and understanding of Australian household mortgages", International Journal of Housing Markets and Analysis, Vol. 2 No. 4, pp. 347-362.

Download as .RIS



Emerald Group Publishing Limited

Copyright © 2009, Emerald Group Publishing Limited

Please note you might not have access to this content

You may be able to access this content by login via Shibboleth, Open Athens or with your Emerald account.
If you would like to contact us about accessing this content, click the button and fill out the form.
To rent this content from Deepdyve, please click the button.