No rush to refinance home loans

A price war between the major banks to secure new mortgage customers hasn't resulted in a rush of borrowers seeking to refinance their home loans, a mortgage broker says.

At the same time, another home loan provider is warning homeowners to read the fine print of their existing mortgage carefully before trying to take advantage of the federal government's ban on mortgage exit fees.

A national survey by mortgage broker Loan Market has found no significant change in refinancing settlements, despite a more competitive environment.

Surveying the company's nationwide network of 136 brokers, Loan Market found 44 per cent had not noticed any significant change in refinancing settlements.

Thirty-seven per cent said there was a slight increase, while just 11 per cent said there was a big increase.

Eight per cent of respondents said there were even fewer refinancing deals.

Loan Market chief operating officer Dean Rushton said one major reason for this less than anticipated refinancing was that banks are going out of their way to retain their existing customers.

"Existing customers who inquire about upgrading or changing their mortgages are being given a lot of attention by (banks') retention teams," Mr Rushton said, releasing the survey results on Monday.

The banks and their retention teams are working hard to improve their customer service and are willing to review their pricing in some circumstances.

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"This often results in clients who threaten to jump ship continuing with their lender," he said.

But he warned that people need to be aware of the full picture in terms of the costs of exiting their old loan and entering the new loan.

"If you eat up any interest rate savings in these costs then there is no financial benefit to switch," he said.

Home loan provider Mortgage Choice has also issued a warning to borrowers that the ban on fees applies only to all new home loans taken out afterJuly 1, although some loans already don't have them and some lenders have made the ban retrospective.

"We want to ensure customers understand the exit fee ban applies only to new home loans ... not existing loans, and there are still other switching costs and home loan aspects to be considered," Mortgage Choice spokeswoman Kristy Sheppard said.

She said regardless of its concerns that banning exit fees will actually damage competition, "the decision has been made".

Mortgage Choice and Loan Market were among a number of home loan brokers who wanted to overturn the ban on exit fees, saying smaller lenders have been able to offer lower interest rates because of such fees.

Attempts to overturn the ban was voted down in the Senate last week.

Ms Sheppard said Mortgage Choice is now concentrating on educating borrowers about what the ban means for them.

"Satisfaction with your home loan commitment comes after making a well-informed decision," she said.

"We don't want to see anyone jump ship without a strong grasp on the pros and cons."

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Created on Dec 31st 1969 18:00. Viewed 0 times.

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