Mortgage exit fees, which sometimes go up to $7,000, will be banned from 1 July under a Government regulation that was approved today.
The regulation, which did not need the Parliament’s approval, is intended to make it easier for home borrowers to shop around for better deals, even if they already have an existing loan.
The Government believes mortgage exit fees have been “one of the biggest roadblocks stopping Australians getting a better deal for their families”.
Treasurer Wayne Swan produced the regulation as part of a package to increase competition among lenders, believing that it will allow borrowers to choose alternatives if their bank isn’t “doing the right thing by them”.
The regulation aims to deal with large exit fees that wipe out any savings which might come from taking out a loan on lower interest or better conditions. The ban on exit fees covers variable interest home loans, and only applies to loans taken up after 1 July.
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