The government’s controversial new ban on mortgage exit fees will make it easier to change lender through mortgage refinancing, some consumer groups agree.
Victoria’s Consumer Action Law Centre, Consumer Credit Legal Centre NSW and consumer group Choice say it will be simpler for borrowers to move to a better deal.
“Business models that rely on trapping consumers in uncompetitive deals have no place in a reformed banking sector,” Matt Levey of Choice asserted.
He claims some smaller lenders – such as credit unions are accommodating the new rules – and in many cases had previously only charged minimal exit fees.
But the much-vaunted attempt to improve competition in the home loans industry is still coming in for criticism from small non-bank lenders, who currently hold a one per cent share of the mortgage market.
A recent Mortgage and Finance Association of Australia survey found that over 55 per cent of respondents intend to lift lending rates and re-introduce mortgage establishment fees to offset the cost of the exit fee ban.
Consumer Action spokesman Gerard Brody claims this will make it more difficult “for borrowers to compare the true cost of different home loans”.
Mortgage refinancing may seem attractive – but if borrowers want to switch again they may face fees from the new lender. It is important to discuss your options with your broker, who can help you choose the right financial product.