The mortgage fees and practices by the major banks have been examined in a new study by the Australian Competition & Consumer Commission (ACCC).
It stated that the discretionary pricing practices of residential mortgages by the banks are not clear to many borrowers. This is costing Australian borrowers more money every year.
The ACCC said there seemed to be unnecessarily expensive search costs and efforts by the banks that discouraged borrowers from looking around for better deals.
The report maintains that the pricing for mortgages by the big banks is opaque and they have a lot of discretion. The banks profit from this and it is against their interests to make pricing transparent.
The study also revealed that banks have taken advantage of increasing rates for interest-only loans, which allowed them to post a combined revenue gain of over $1.1bn during the recent fiscal year.
Banks operate in an oligopoly market structure. The biggest four banks alone control 80% of the market. When ANZ increased interest-only rates in June 2017, other banks followed suit.
The ACCC Chair, Rod Sims said “such is the oligopolistic nature of banking that the banks all took the opportunity to increase rates on both new and existing interest-only mortgages, despite APRA’s measures only applying to new lending.”
According to Sims, borrowers should be prepared to switch to another lender. “I encourage more people to ask their lender whether they are getting the lowest possible interest rates for their residential mortgage.”
He said that there is nothing wrong with switching lenders, especially if it means a more competitive interest rate.
However it is not always so easy for borrowers to negotiate with their lender over the price of their mortgage. This takes time and many simply do not have the experience to deal with such matters.
This is why using a mortgage broker such as Illawarra Home Loans https://illawarrahomeloans.com.au can be an advantage.
Illawarra Home Loans has been helping Australian families and investors since 1989.
This means that they have the experience to effectively negotiate on your behalf with a large panel of lenders to get their clients the best interest rates on the market.
They have built strong relationships over the years with their lenders. The experience and negotiating power of Illawarra Home Loans often means lower interest rates and better conditions than what your bank may offer you.
For a confidential discussion and friendly advice talk to the mortgage expert, Justin Bailey, at Illawarra Home Loans – email: email@example.com or call 02 4226 5555
For more information visit their website at https://illawarrahomeloans.com.au
At Illawarra Home Loans, your needs are their most important consideration.
Please note that the above is general financial information only and is not intended as personal financial advice for which you should contact a licensed financial professional.