Exit Fees Out or Not?
The proposed ban on mortgage exit fees by the federal government has been put on hold following its rejection by a Senate committee.
The Senate economics committee inquiry into competition in the banking sector has advised that the ban on exit fees may result in less competition and higher upfront fees. It suggests that instead of an immediate ban, new consumer protection provisions should be given a chance to work.
The exit fee ban was originally meant to apply to loans taken up after 1 July 2011 and wasn't going to include existing home loans, fixed rate mortgages or discharge fees. The aim of the ban had been to increase competition between the big four banks, but this has always been hotly contested.
While the debate continues about the pros and cons of removing exit fees, keep in mind that these fees actually make up a very small proportion of the 25-year cost of a home loan and it is still interest rates that really dictate how much your loan will cost over the long term.
For this reason it pays to do your research to find out whether your current loan provides the best choice or whether by switching to another product you can achieve savings.
More than ever mortgage brokers will play an important role in analysing the options that best suit your individual set of circumstances. We can inform you of the current state of the market and help steer you through the confusion of comparing multiple home loan products.