Senate Supports Government Ban on Mortgage Exit Fees

I welcome the decision by the Senate today to vote in favour of the Government’s ban on mortgage exit fees on new home loans from 1 July.

Getting rid of exit fees is a victory for Australians because it removes one of the biggest roadblocks preventing families from getting a better banking deal.

Lenders will have to win the loyalty of their customers with good service and competitive lending rates, not by shackling their customers with mortgage exit fees.

It’s disappointing the Coalition couldn’t support Australian consumers, and instead tried to keep exit fees in place and lock families into uncompetitive mortgages.

Getting rid of exit fees is a critical measure that will help boost competition in the home loan market by giving Australians the freedom to walk down the road and get a better deal without being slugged with a penalty fee.

The Government’s ban on exit fees is part of our comprehensive package of reforms designed to bolster competition and give Australians a fairer go in the banking system, including:

Total investment of $20 billion in the residential mortgage-backed securities (RMBS) market, which has kept smaller wholesale lenders open for business and competing with the banks
Building a fifth pillar in the banking system based on the combined competitive power of our mutual credit unions and building societies
Confirming the Financial Claims Scheme as a permanent feature of our financial system to secure critical deposit funding for our smaller lenders
Fast-tracking legislation to get a better deal for Australians with credit cards

CANBERRA
22 June 2011