The vast majority of under-30s have a poor understanding of the mortgage market, leaving them open to bad deals, research by ME (previously ME Bank) has found.

Just 15 per cent of young adults said they were “confident” they knew enough to find the right home loan for their situation.

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But the figures weren’t much better for older generations. Overall, just 41 per cent of the Australians surveyed said they are confident of their grasp of the mortgage market.

The cash rate also flummoxed respondents, with 42 per cent unable to state that the current rate is two per cent. Thirty-seven per cent didn’t know how the cash rate affected mortgage rates, and 10 per cent thought it was irrelevant (read a cash rate explainer here).

ME head of home loans, Patrick Nolan said he was “amazed” by the lack of knowledge of basic home loan features.

“We were particularly surprised that older generations of Australians – those who typically have more exposure to home loans – have low levels of home loan literacy. Only 43 per cent of 30 to 49 year olds and 51 per cent of those aged 50 and over were confident with their home loan choices, far lower than anticipated.

“Financial literacy is valuable asset and one of the biggest money savers over time – it pays to be informed.”

Given buying a house is the biggest investment most people will ever make, Mr Nolan urged potential borrowers to do their research before they approach the bank.

You can get more information at moneysmart.gov.au. You can also compare a wide range of home loans at finder.com.au.

Some other findings of the research were:

– 55 per cent had no understanding of an offset facility

– 40 per cent had no understanding of a redraw facility

– 38 per cent had no understanding of interest only repayments

– 26 per cent had no understanding of extra repayments