ASIC’s review of mortgage entry and exit fees

The Government has released the Australian Securities and Investments Commission’s review of mortgage entry and exit fees (pdf).

The review examines Australian mortgage fee data for 298 home loan products (standard, basic and introductory rate), from a cross section of large banks, 2 other banks, credit unions and building societies, and non-Authorised Deposit-taking Institutions (non-ADIs, also known as non-banks).

Findings include:

• a majority of home loans include an additional fee for early termination. However, there is significant variation in the method of calculation of these fees and, consequently, their size. On average, non-ADI lenders charge the highest early termination fees, followed by large banks. Within each lender type, there is a loan offered with a nil early termination fee.

• The complexity of the home loan options available, and to some degree the variations in the way they are described, makes the choice for consumers a difficult one. The review provides definitions of various product terms and also considers consumer credit regulation and proposed mortgage broker licensing.

The Treasurer says consideration of a national regulatory framework for mortgage lending, to be overseen by the Commonwealth, will be informed by the ASIC report and will underpin future efforts to ensure full disclosure of fees and boost competition in the banking sector.