More borrowers could soon switch home loan providers as new research reveals it is now cheaper to switch and open a new home loan.
According to data from RateCity, the average cost of upfront fees – including application, documentation, legal, securitization, settlement and valuation fees – has decreased from $707 in January 2011 to $673 today.
While the majority (72 percent) of variable home loans charge upfront fees, some lenders have removed these fees from some of their home loans including Bank MECU, Bank of Queensland, NAB, The Rock Building Society and ECU Australia.
The average discharge fee – which is charged when a borrower ends the loan – has also dropped by $49 according to RateCity.
RateCity spokesperson Michelle Hutchison said the drop in upfront fees was unexpected and shows that lenders are fighting harder to attract new customers.
“At the time there was speculation that lenders would hike their upfront fees to recoup the potential revenue loss from the exit fee ban. But some lenders have in fact lowered their upfront fees or dropped them altogether,” she said.
“We’ve also found some lenders have introduced “fee-free” home loans such as Commonwealth Bank and Bankwest, and new players that have entered the market are offering no upfront fees such as LJ Hooker and UBank.
“This shows that lenders are working harder to win over new customers by making it more affordable for prospective home buyers to enter the property market or for existing borrowers to switch.”