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Concern over mortgage exit fees false: MFAA
Released 15 June 2011

The Mortgage & Finance Association of Australia (MFAA) has questioned the basis of the government’s ban on mortgage exit fees.    

Research conducted by MFAA – a survey of over 1,000 householders – has shown that the public’s concern about mortgage exit fees as claimed by the government is not supported.
It also showed that when selecting a mortgage product, the most important factor was interest rates, according to 50.2% of the respondents.

Following interest rates, in order of importance, were fees and charges (15.5%), flexibility of product (8.7%), fixed or variable rate product (8.3%) and special features such as offset account (8.0%).

At the very bottom of the mortgage selection criteria for Australian householders – even lower than loan to value ratio (4.0%) and brand (3.2%) – were exit fees at 1.7%.

MFAA Chief Executive Phil Naylor said the survey results undermined the government’s argument that a ban of mortgage exit fees was essential for mortgage competition.

In addition, the Senate Economics Committee thoroughly investigated this last month and it made comments that all Australians should note,” said Naylor.

“It called for the Australian Securities and Investments Commission (ASIC) exit fee guidelines to be evaluated before any bans were implemented or that small lenders should be exempted from the Federal government’s ban on mortgage exit fees. The ASIC guidelines had been released only three weeks before the government announced the ban. “

Naylor said competition in mortgages was supposed to be boosted by the government banning exit fees as of 1 July. Yet, those that have looked closely at this have warned that the opposite is the case.