Just last week we were talking about the fact that few Australians consider changing their home loan provider, even though the figures would suggest that it’s possible to save a lot of money by doing so. Definitely one of the reasons that not many people think about this – me included – is that we are concerned about the high exit fees we might have to pay if we get out of our mortgage early.
Fear no more! For home loans taken out from July 1, 2011, the federal government has just announced that exit fees on such mortgages will be banned. This, of course, will make the prospect of changing your home loan provider more attractive. But will it actually keep costs down on the whole? Although many experts agree that the exit fees have been unjustifiably high, there is of course some cost involved, especially if people start changing mortgages like they change underwear – and so some people think that this might harm the smaller lenders in particular and as a whole, mortgage holders might not be any better off. At the same time, many commentators have said that it isn’t really the government’s business to regulate something like mortgage exit fees – or if it is, then they should also be looking at other unfair fees like mobile phone contract exit fees and the extremely high interest rate charged on overdue balances on credit cards.
However, at the same time, the government has also thrown out some more funds to smaller, non-bank lenders as part of its banking reform package. They’ll be getting access to more bonds and this should help keep them able to compete with the big four banks. Of course, we’ll have to wait and see if this works out as planned, and whether or not we start hopping all over the place with our mortgages too – but in this case it does seem like some change is better than none.