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How your home loan shapes your world


children enjoying clean water

$350,000. That’s about how much interest the average Australian pays on a new home loan.^

Given how much you’re going to pay, your natural instinct would be to look at which bank has the best price. But have you thought about what they do with the money you pay to them? And if you knew what they were doing, would you still want to give them your business?

How Your Bank Uses Your Interest Payments

Your bank uses your interest payments for a lot of basic things – paying interest to deposit holders, paying staff salaries, and paying dividends to its shareholders. It also uses your interest payments to invest in other businesses that shape our economy. Banks invest in businesses in two main ways:

  • by providing loans to other businesses; and
  • by buying shares in other businesses, often through superannuation and managed funds they control.

Without bank investment, most businesses wouldn’t be able to operate or grow. That makes banks the ultimate leaders of the business world, and such a powerful force in shaping the world we live in. So the question is, what sort of leadership do you want – one that works for the greater good, or one that only works for its own good?

What Sort of Leader is Your Bank?

Here are three publicly uncovered examples of what large banks operating in Australia have invested their customers’ money in:

  • Nuclear Weapons: 4 banks provided financing to companies producing key components for nuclear weapons.
  • Land grabs: Oxfam has suggested that 4 Australian banks were involved in financing companies conducting unfair land deals in developing countries.
  • Deforestation: the ABC has drawn links between Royal Group, ANZ’s joint venture partner in Cambodia, and illegal logging in that country.

If you had a choice, would you willingly give your bank $350,000 to spend on these sorts of investments?

The Good News – There Are Good Banks

For every bank that invests in something at odds with your values, there are many more that don’t. Many banks have no investments in weapons, human rights abuses or environmental abuses. In fact, some even have policies that bar themselves from making these investments, or that force them to get rid of any existing such investments.

There are also a lot of banks that don’t engage in the sort of unethical behaviour towards customers that we frequently see reported in the news.

The Bad News – It’s Hard to Know Who the Good Banks Are

Every bank will tell you it’s doing the right thing. It’s not in their interests to disclose ethically questionable practices, and it often takes a good journalist or a whistleblower to uncover them. So is there any way you can find out who the good guys are?

Ethical Home Loan Finder Service

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

Understanding You

Everyone’s ethics are different, and so are everyone’s home loan needs, so there’s no “one-size-fits-all” solution. abfinance takes the time to understand your situation so they can find you a bank that fits both your financial needs and your values.

If you’re looking for a new loan, or thinking of switching your existing loan, you can get a free, no-obligation consultation with abfinance to discuss your 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).

© 2018 Start Sustainable Pty Ltd.