My Sydney Real Estate

JULY 1 brought a number of changes for the new financial year, including income tax cuts. But new rules also now apply in regards to exit fees on home loans. According to financial comparison service provider RateCity, the change allows borrowers to challenge early exit fees they feel are unfair or unconscionable. The Australian Securities and Investment Commission would be given supervisory powers over exit fees. RateCity chief executive officer Damian Smith said “it is great news for borrowers to have the government and ASIC ensuring that borrowers won’t be discouraged to leave their current mortgage for a better deal. “The crackdown on over-priced early exit fees will hopefully spark greater competition by lenders, as they will need to keep in line with the competition if they want to keep their market share of mortgages.” However Mr Smith said the change only applies to mortgages taken out from July 1. A potential drawback of the changes is that other fees, such as documentation or settlement fees, may be increased, or new ones, including documentation or administration charges, may be introduced. A spokeswoman for Mr Smith said the Australian Bankers Association was quoted as saying establishment fees for Australian mortgages are cheaper than overseas because they are offset by higher exit fees. Meanwhile existing mortgage holders are being urged to take advantage of last week’s decision by the Reserve Bank not to raise interest rates and pay more off their loans… [...]