Thousands lose out over fixed home loan break fees

While many Australians have probably celebrated this week’s rate cut as they anticipate a flood of new low-interest home loans, those on fixed-rate home loan deals may not be quite so jubilant.

According to Australian Associated Press, the 43,000 borrowers on these deals now face an average exit fee which is rising as home loan interest rates fall.

The news agency noted that for those who took out a $250,000 three-year fixed-rate loan at nine per cent in June, they may be forced to pay an exit fee of $18,000 if they decide to switch to a standard variable rate home loan.

Fees may be higher for those who took on a fixed-rate deal in August than those who opted for such a deal in March, when the base rate was higher.

The Reserve Bank of Australia announced on Monday that it would cut 100 basis points off the base rate of interest, its fourth cut in as many months.ADNFCR-1761-ID-18915853-ADNFCR