ASIC probes mortgage fees
(8 April 2008 – Australia) ASIC has released a report into the entry and exit fees of mortgages in Australia, showing that exit fees vary dramatically.
The Federal Government has indicated that, considering the dramatic variance in exit fees established in this report, it is important that lenders face as much competition as possible.
The review is part of the account switching initiative which began in February 2008 to boost competition in the banking sector.
The research found that fees have grown from 0.67 percent to 1.39 percent annually in the period of 1995 to 2007. Early termination fees now take up 41.8 percent, up from 19.3 percent.
David Bell, chief executive of the Australian Bankers’ Association said that the ASIC’s review of mortgage entry and exit fees showed that non-Authorised Deposit-taking Institutions (non-ADIs) typically charge higher fees than banks. He added that it was the non-banks that pioneered the use of deferred fees.
Last week the Commonwealth and States reached an agreement at the Council of Australian Governments to develop a national regulatory framework for mortgage lending, to be overseen by the Commonwealth.
The review is part of the account switching initiative which began in February 2008 to boost competition in the banking sector.
The research found that fees have grown from 0.67 percent to 1.39 percent annually in the period of 1995 to 2007. Early termination fees now take up 41.8 percent, up from 19.3 percent.
David Bell, chief executive of the Australian Bankers’ Association said that the ASIC’s review of mortgage entry and exit fees showed that non-Authorised Deposit-taking Institutions (non-ADIs) typically charge higher fees than banks. He added that it was the non-banks that pioneered the use of deferred fees.
Last week the Commonwealth and States reached an agreement at the Council of Australian Governments to develop a national regulatory framework for mortgage lending, to be overseen by the Commonwealth.
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