The Mortgage and Finance Association (MFAA) surveyed 1000 mortgage holders, with more than half (50.2 per cent) saying interest rates were the most important factor they considered when choosing a home loan.
Fees and charges ranked second with 15.5 per cent while exit fees ranked last with only 1.7 per cent of respondents claiming they are a concern.
The existence of exit fees fell behind LVR (loan to value ratio’s) and brand in its importance to consumers.
MFAA Chief Executive Phil Naylor said the survey shows the government’s ban on exit fees is misguided.
“Non-banks are synonymous with lower interest rates,” he said. “Lower interest rates are the sign of healthy competition and the factor most important to borrowers. So why is the government focusing so much energy on exit fees – the least important factor – and telling people it will boost competition?”
Naylor pointed out that non-bank market share, which sat at 13.6 per cent prior to the GFC, had fallen to 1%. He commented that the DEF ban will further erode the competitiveness of non-bank lenders.
“Banning exit fees will not boost competition among mortgage lenders. It will act against the most competitive component of the mortgage market – the non-bank lenders – and take away the sector of the market that always kept interest rates low,” Naylor said.
In addition, the Senate Economics Committee thoroughly investigated this last month and it made comments that all Australians should note,” said Mr Naylor.
“It called for the Australian Securities and Investments Commission (ASIC)
exit fee guidelines to be evaluated before any bans were implemented or that small lenders should be exempted from the Federal government’s ban on mortgage exit fees. The ASIC guidelines had been released only three weeks before the government announced the ban. “
Mr Naylor said competition in mortgages was supposed to be boosted by the government banning exit fees as of July 1. Yet, those that have looked closely at this have warned that the opposite is the case.