Banning lender exit fees will do little to stimulate competition, Intouch Home Loans’ chief Paul Ryan has claimed.
Yesterday, the federal government launched a draft consultative paper outlining its plan to ban the exit fees imposed by all lenders, not just banks.
Mr Ryan said while the government believes exit fees are the major deterrent to consumers refinancing, this simply isn’t the case.
“The real elephant in the room is the double payment of mortgage insurance a customer is subjected to any time they look to borrow above the 80 per cent of the property value,” Mr Ryan said.
According to Mr Ryan, first home borrowers who took advantage of the government’s first home buyers grant and obtained 100 per cent finance from the banks will particularly be at the mercy of the banks.
“The exit fee won’t be the deterrent, it will be because they are required to pay for mortgage insurance again, a premium up to 2 per cent of the loan amount,” he said.
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