The federal government’s ban on home loan exit fees is set to become law as of July 1, with the Senate Commottee rejecting a bid to overturn the measure.
The Mortgage & Finance Association of Australia (MFAA), which had sought an exemption for smaller lenders from the banning of exit fees, said while it accepts the decision of the parliament, it will continue to fight for a competitive mortgage market.
The MFAA had advocated for the ban on mortgage exit fees to include an exemption of small non-bank lenders, based on the fear that without exit fees the non-banks will find it hard to compete and that with less competition, interest rates would increase for all Australians.
“It became clear during our lobbying that there are many in Parliament who share our concerns that the breadth of competition in the mortgage market needs to be enhanced in order to keep interest rates low,” said MFAA president Phil Naylor.
Recent ABS figures confirmed that smaller lenders now have only one per cent of the mortgage market, down from their 13.6 per cent market share just prior to the GFC.
The banks now have a market share of 92 per cent, according to the MFAA.
“Non-bank lenders are synonymous with bringing down the margin on home loans in Australia,” said Mr Naylor, “making mortgages more affordable for all Australians.”