Low levels of financial literacy are leaving consumers without the knowledge to get the best deals on home loans. A survey of 1,000 people carried out on behalf of industry super fund-owned bank ME, found 40% did not know how the cash rate affects mortgages.

The cash rate, set by the Reserve Bank, is a driver in variable mortgage interest rates and is at a record low of 2%. Generally, the lower the cash rate the lower interest rate on variable rate mortgages. However, there are other factors at play, such as the lenders’ cost of funding of the mortgages and competition between lenders.