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How does an ethical home loan make a difference?


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Australia’s largest home lender has more than $400 billion worth of home loans on its books. If it did something against your ethics and you left for another bank, would it even care?

Your vote does count

Your single vote is usually too small to change an election, but what happens when others feel the same way as you, and start to vote with you? You may only have to rustle up a bunch of like-minded voters in your electorate to cause a stir. News travels up to the head offices of the major parties and they suddenly start listening to you.

Switching to an ethical bank is uncannily similar. A bunch of people start to switch banks, and news travels up the line to senior management – usually because a local branch or call centre has copped the brunt of the backlash, and is worried about missing its revenue targets. All of a sudden, your issue is on the minds of those in charge.

Home loans are the banks’ cash cows

Mortgages account for between 40% and 60% of all loans on the books of the big 4 banks. That’s far higher than banks elsewhere in the world, and is a major reason why our banks are so profitable. By moving your home loan, you’re hitting a bank where it hurts the most.

You’ll be encouraging banks to keep doing the right thing

When a bank forgoes sneaky tactics in dealing with customers, or forgoes investments in companies linked to activities like nuclear weapons, illegal logging and land grabs, it loses an opportunity to make a lot of easy money.

For a bank to maintain strong ethical principles, it needs to see a strong commercial return for doing so. Switching to an ethical bank and letting them know you switched for their ethics helps them make a strong return, and gives them encouragement to further strengthen their principles.

You’re putting your money where your mouth is

If you’re passionate about social issues such as the environment, human rights or social injustice, chances are you’ve expressed your views at a dinner party, on social media, or even on a stage somewhere. But have you had an opportunity to take concrete action on the issue, to do something that helps fix the situation?

Switching your home loan is one of the most powerful statements you can make about the world you want to live in. The average Australian donates $765 a year to charity, but pays $11,667 in interest per year, or $350,000 in total, over the life of the average home loan.^ Would you want to give that sort of money to a bank that acts unethically towards its customers, or that funds activities that go against your conscience, such as nuclear weapons, gambling or deforestation? Or would you rather give it to a bank whose behaviour is consistent with your values?

How do you go ethical? It’s easy

We’ve partnered with ethical home loan experts abfinance* to help you get a home loan with a bank that shares your vision for a better world, while also meeting your financial needs. abfinance uses independent research on the environmental, social and corporate governance of businesses to find you banks that value the things that matter to you the most.

Discuss your options

If you’re looking for a new loan, or are thinking of switching your existing loan, you can get a free, no-obligation consultation with abfinance to discuss ethical home loan options that meet your financial needs.

*Money Grows on Trees has partnership agreements with businesses that share our values, including abfinance. As part of our agreement, abfinance pays us a referral fee for business we refer. We use this money to keep our site running and to keep the information we produce free of charge.

^Based on the national average new home loan size of $375,000, at 5% p.a. interest over 30 years (source: Australian Bureau of Statistics, Housing Finance – October 2017). $765 is the average annual individual charity donation in Australia in 2016 – source: Giving Australia.

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