eChoice, the national online mortgage broker eChoice (eChoice.com.au) is predicting a flood of refinancing activity over the next 24 months, should the Australian Securities and Investment Commission’s (ASIC) review of mortgage fees help to deliver a healthier playing field for borrowers, searching for a better deal on their mortgage.
eChoice has spoken out following recent industry data highlighting almost two in five new mortgages written in May this year were for refinancing activity, and having seen a surge in refinancing queries to its own website in the last three weeks.
A Firstfolio General Manager and eChoice spokesman, Rob De Soza, said: “Australians are paying high mortgage fees when compared with countries such as New Zealand and Canada, the proposed review will help spark activity among lenders to ensure not just their fees, but the terms and conditions of their lending contracts reflect a true and fair arrangement for the borrower.
“Exit fees are often the biggest barrier for homeowners wanting to switch lenders, due to the costs incurred by the lender to repatriate the funds. But as a result of the review, we imagine lenders are reviewing their fees, some of the big banks started sometime ago, which will create a contagion effect that will see fees shrink, and competition on interest rates rise,” Mr De Soza said.
“Should these outcomes come in to play as a result of the review, hundreds of thousands of Australian mortgage holders will be in a much healthier position to refinance their home or investment property loan, if it’s in their best financial interests,” he added.
Mortgage exit fees vary from contract to contract, but typically the largest cost arises when paying out a loan early. Often these costs are detailed in the contract, but under the new Consumer Credit Protection Laws, borrowers can have greater confidence when signing a mortgage contract as all fees, including the terms and conditions must be clearly laid out in writing for the borrower before signing the contract.
