Mortgage news on rates, laws and politicians

This week the mortgage news in Australia varies from banks trying not to raise interest rates, to new laws coming in to stop some of the excessive fees we can pay, and on to a mortgage belonging to the Leader of the Opposition, Tony Abbott! In more detail:

  • The global financial crisis, among other factors, has made money more expensive for Australian banks, but they are under a lot of pressure not to raise interest rates unless the Reserve Bank does – so they are now having to find other methods of recouping their costs. According to reports reducing the discounts routinely offered on home loan products is one of the main ways that the major banks are trying to recover the extra costs they are incurring at the moment. In my case, I’m grateful that they are doing this and avoiding raising interest rates again on my mortgage!
  • Just last week I reported on unfairly high early repayment fees on mortgages, and just in time some new laws have come into effect to stop them. For all mortgages signed up to from 1 July 2010, both “unconscionable” and unfair fees will be illegal. Banks will still be entitled to recover costs from borrowers who pay off their mortgage early, but not to the extremes we have seen in recent times, like $5,000 penalties which have no basis in actual costs incurred by the lender.
  • Current Liberal leader Tony Abbott is in the news often enough – even this week when Australia got a new Labor Prime Minister – but this might be the first time Abbott has appeared in mortgage-related news. The story goes that he has a $710,000 mortgage on his family home. That adds up to a fair amount of interest to repay! Apparently he took out this new mortgage in the last few years to cover the costs of private school education for his daughters, but because he hadn’t officially declared it, Abbott and his mortgage hit the headlines this week.