Banks urged to stop “unfair” delays in mortgage transfer process
Chief Executive of the Finance Brokers Association of Australia (FBBA) Peter White has urged banks to stop the “unfair practice” of delaying their customer’s mortgage transfer process.
“Banks are notorious for holding onto a customer's mortgage as long as possible,” said White in a roundtable discussion with the Federal Minister for Small Business, Bruce Billson according to Broker News.
“Time is money and while banks make more through maximising revenues and fee charges, the customer is the one losing out,” he said.
White said the “crux of the problem” is that there are no current regulations or requirements about the time it takes from the approval process through until settlement.
“If banks know they have a limited time frame, we wouldn’t have lenders sitting on discharges for as long as they want.”
These delays are contributing to the overall negative image of lending institutions among Australians says White.
Recent statistics show that the Big 4 banks have lost more than 1% share of the $1.3 trillion Australian home loan market over the past two years in favour of small and non-bank lenders such as credit unions and mutuals.
“It’s clear consumers’ comfort with smaller, online and even non-bank brands is increasing, especially if it equates to big savings on the monthly mortgage,” says Mozo Director, Kirsty Lamont.
Mozo calculated that borrowers with a $300,000 loan could save up to $1,920 in interest and fees each year by switching from the average Big 4 rate to the best value home loans in the market.
In the recently announced, Mozo Experts Choice Home Loan awards, 86% of the best value home loans in the market right now are from small and non-bank lenders.
You can see the full list of winners here.
*Big 4 market share has decreased from 84.8% in April 2013, to 84.3% in April 2014 down to 83.8% in April this year, that’s a difference of $143 billion. Source: APRA Monthly Banking Statistics http://www.apra.gov.au/adi/Publications/Pages/monthly-banking-statistics.aspx