Interest rate cut to test mortgage exit fee ban
Yesterday's decision by the Reserve Bank of Australia (RBA) to lower the official cash rate by 25 basis points to 4.5 per cent will provide the first real test of the Government's controversial mortgage exit fee ban since it was implemented in July, according to mortgage and financial services group Firstfolio Limited.
The cut was the first time the cash rate has moved since the ban was implemented. Any time the RBA moves rates there is a spike in enquiries from existing borrowers looking for the best rate, according to Firstfolio's executive general manager for retail distribution Andrew Clouston.
"Some refinance with a new lender, but many don't after weighing up impediments such as exit fees and bank account portability," he said.
"This will be the first time exit fees are not a factor at a time of interest rate change. The industry will be monitoring closely for signs that borrowers are now more willing to switch to new lenders, or are in fact still 'sticky' to their existing lenders," he said.
Clouston also predicted the easing of monetary policy would reverse the recent trend for borrowers to prefer fixed rate loans.
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