Will exit fee axe rob consumers of choice?

Wednesday 10 November 2010

Article by Mozo

Australians looking to compare home loans could be robbed of choice if plans to put an end to exit fees go ahead, it has been claimed.

Exit fee axe could restrict choice, says expert

The Australian Securities and Investments Commission has indicated that its attention is likely to mainly focus on lenders charging the highest exit fees to customers looking to switch providers, the Australian Associated Press (AAP) reported.

According to the report, while this could lead to the end of exit fees it could also see a number of smaller lenders withdraw from the market.

The AAP cited the fees charged by one Victoria-based lender, which charged customers $7,300 to leave a deal early, compared with those charged by the big banks, with Commonwealth charging $700 and Westpac and NAB demanding $900.

"Smaller, non-bank lenders, who charge higher exit fees, are more likely to lose out, potentially robbing home borrowers of choice," the news provider said.

"But the big banks are the least likely to be affected by the corporate regulator's crackdown."

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