More than nine in 10 Australians would rather borrow from a lender with a strong commitment to ethical behaviour. But tough economic conditions have left many conflicted between balancing ethical considerations and finding the best interest rate.
New research from customer-owned Great Southern Bank shows 92 per cent of Australians with a home loan would prefer to choose a lender with a high standard of business ethics, environmental commitments, and social and community values.
It was the number one priority for borrowers outside of cost savings, ranked ahead of customer service, loan features and easy-to-use technology.
The highest interest rates in a decade have led to nearly eight in 10 (78 per cent) admitting they find it challenging to balance their ethics and values with selecting a lender with the best rates.
The increasing preference for socially conscious banking comes as sustainability becomes more important to consumers. PWC research earlier this year revealed 48 per cent of Australians preferred to purchase from businesses with strong company values and commitments to doing the right thing, compared to only 32 per cent in 2019.
Key research findings:
92 per cent of respondents would be more likely to select a lender with highly rated business ethics, environmental commitments and social and community values.
Outside of cost savings, prospective borrowers’ top five priorities in order of importance are:
Business ethics, social and community values
Customer service and support
More loan features
Environmental action and targets
Easy-to-use technology
78 per cent of Australians find it challenging to balance their ethics and values with selecting a lender with the best rates in the current rising interest rate environment.
94 per cent per cent of those who are refinancing or looking to refinance are seeking a better deal due to rising interest rates and the cost of living.
Great Southern Bank Chief Customer Officer Megan Keleher said: “In a rising interest rate environment, it is understandable that Australian households are seeking out the
best value loan to meet their specific circumstances.
“While there’s a perception that choosing a green or ethical lender is more expensive, research has found this is not necessarily the case. Lenders with strong values can also provide excellent rates, reduced or no fees, and longer-term value, meaning borrowers don’t have to compromise on choosing a bank that aligns to their values.”
Ms Keleher encouraged Australians looking for a home loan – whether they are first home buyers, investors or refinancers – to ask their lender or broker to provide information about the bank’s environmental, social and ethical credentials.
“You may be pleasantly surprised to realise there are responsible banks out there that are able to also provide cost savings on loans. In our case, Canstar found customers with a Great Southern Bank home loan saved around $1,182 in interest and fees over the year to June 2022, compared to if their home loan was with one of the big four banks. This reaffirms that purpose-led banking can also deliver cost savings.”
A number of Australian banks and home loan providers have committed to ethical business practices and environmental targets in recent years.
In 2022, Great Southern Bank published its Climate Action Plan, which aims to reach net zero emissions by 2040 – 10 years ahead of the Paris Agreement. This builds on the bank already becoming carbon neutral in 2021. The bank has also completed all actions in its first Reconciliation Action Plan and achieved all 15 goals from its Financial Inclusion Action Plan.