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ISCOVER
Staff Reporter
A majority of lenders are refusing to introduce high upfront fees in order to cope with the removal of exit fees, new research has found.
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According to RateCity, while some lenders have introduced upfront fees, on average, these fees have only increased by $8.
RateCity chief executive officer Damian Smith said borrowers consequently now have a much better outlook for switching lenders.
“There’s been a lot of doom and gloom about the abolition of excessive early exit fees leading to a big increase in upfront fees. After nearly a month of the new rules, that just doesn’t appear to be happening,” he said.
“By definition, it now costs less to leave a new variable rate mortgage if you’re unhappy with rates, fees or service – and only a handful of lenders have made it more expensive to enter a new variable rate mortgage. We also suspect that in the current climate, borrowers looking to switch will be able to negotiate any upfront fees down,” he said.
“We believe that the removal of early exit fees is one of the drivers behind growth in the refinancing market – the only major growth area of home lending at the moment.”
RateCity compared changes in upfront fees including application, valuation, documentation, legal, securitisation and settlement fees.
