Login
ISCOVER
Staff Reporter
More than 85 per cent of lenders and aggregators believe their competitive position in the industry will be hampered when the exit fee ban comes into effect from 1 July.
To continue reading the rest of this article, please log in.
Looking for more benefits? Become a Premium Member.
Create free account to get unlimited news articles and more!
Looking for more benefits? Become a Premium Member.
According to a new survey by the MFAA, 55 per cent of mortgage managers and aggregators said they will need to lift their mortgage rates and re-introduce mortgage establishment fees to offset the costs that will be incurred if the exit fee ban is not blocked by the Senate.
The executives also expect to be forced to cut their staff numbers and overall operating costs to offset the ban. 85 per cent of those surveyed said they were not properly consulted by the Federal Government before the ban was announced.
MFAA chief executive Phil Naylor said small lenders will either need to bear the extra costs associated with banning exit fees themselves or lift their rates – making them less competitive.
“This will not be a good result for borrowers, who are going to be penalised as competition slows in the mortgage market,” he said.
Last month, the Senate Economics Committee into banking competition recommended that the Gillard Government's ban on exit fees not proceed.
The committee said the government should allow a proper assessment of the November 2010 ASIC Guidelines on exit fees before banning them, or alternatively, exempt small lenders from the proposed ban.
“The MFAA urges the government to implement the committee's recommendations and allow small lenders to continue charging exit fees, as competition will be depleted,” Mr Naylor said.
“The government has defined a deferred establishment fee as an 'exit fee', yet this fee has brought down the margins on home loans for many hundreds of thousands of Australians over the last decade. Now our members cannot use this mechanism to compete and Australian borrowers will be the losers.”
