The federal government’s proposed blanket ban on exit fees has been passed into law however broker groups warn that borrowers may be no better off.
The original plan to ban exit fees was tabled last year when the majors moved above and beyond the Reserve Bank of Australia.
Treasurer Wayne Swan hailed the new law, which will apply to all new home loans from 1 July, as a victory for Australian families.
“Exit fees can be so high that they completely wipe out the savings from switching to a cheaper mortgage with another lender,” he said.
But it seems not everyone feels the same way as Mr Swan.
Speaking to Smart Property Investment about the government’s decision, Smartline’s executive director Joe Sirianni said the new law would hamper, rather than promote, mortgage market competition.
“The banks will come up with different ways of recouping the fees. The ones that are really hurt by this law are the smaller banks and non-bank lenders,” he said.
“The mortgage industry has warned the government time and time again that this move would do little to stimulate competition, but they just haven’t listened, which is very disappointing.”
Mr Sirianni said it would be interesting to see how lenders react to the news and what the non-bank lenders will do.
“We will just have to wait and see what happens,” he said.