As feared, smaller lenders have begun increasing home loan upfront fees in response to the exit fee ban, which comes into effect tomorrow.
Aussie, ME Bank and the Greater Building Society have all advised of home loan fee increases from 1 July.
Aussie will increase the application fee on its variable rate home loans to $600, up from $250 – $500 depending on the loan type. Aussie’s fixed rate home loan fees are also rising by a total of $185.
ME Bank has introduced a new $150 legal fee and $150 valuation fee on its home loans, increasing its upfront fees by a total of $300, and the Greater Building Society will introduce a $500 application fee on all of its home loans.
The Government’s ban on exit fees was supposed to be a win for Australian homeowners and borrowers, making it easier to switch home loans and stimulate competition. But news that the smaller lenders have announced price increases, while the big banks have not, confirms fears that competition in the home loan market may be lessened not increased as a result of the exit fee ban.
Mozo’s top tip for new home loan borrowers
Use the comparison rate to check the true cost of a loan. Even if you are confronted by a large upfront fee, the interest rate is still the main factor in determining the overall cost of a loan.
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