Industry welcomes home loan price review

The MFAA and the FBAA have welcomed Treasurer Jim Chalmers’ commitment that Treasury will examine the recommendations of the 2020 Home Loan Price Inquiry.

The MFAA participated in the original inquiry in 2018, which focused largely on impediments to switching home loans.

The inquiry highlighted that the loan discharge process was hampering access to credit for people trying to refinance. The MFAA led the charge when it came to encouraging the federal government to reinvigorate the inquiry’s recommendations.

Two of the Home Loan Price Inquiry recommendations that the MFAA has been calling for are a standardised discharge process and capping the discharge process at 10 days with reports that some big lenders are taking up to two months to discharge mortgage refinances.

MFAA CEO Anja Pannek (pictured above) said the MFAA had been advocating with government and Treasury and raising key issues at numerous meetings and submissions including its 2023-24 pre-budget submission.

MFAA advocacy based on data and member feedback

“Our advocacy on this issue has been based on both data and the real experiences of our members and their clients,” Pannek said.

“We held roundtables with MFAA members across the country earlier this year where they shared examples of their experiences of the hurdles they, and their clients, face when discharging their home loan to refinance. It was clear that much of the pressure that was being felt is simply unnecessary and could be significantly reduced if the Inquiry recommendations were implemented.

“It was these stories of everyday Australians trying to access more affordable loans we were able to convey to government and Treasury, together with extensive industry data – data that only the MFAA can collate due to our strong relationships with industry partners – that made it obvious that these issues need to be addressed.”

MFAA push to take friction from customer experience

Pannek also highlighted that improving the loan discharge process was not about eliminating retention activity by incumbent lenders, it was about taking friction out of the customer experience.

“Retention activity is a normal part of business, and we encourage lenders to put their best foot forward when existing customers and their brokers ask about repricing,” Pannek said.

“We know from our member research that negotiating with the existing lender is the first step for our members take, and this should be respected by lenders.

“With borrowers facing into both cost-of-living pressures and higher mortgage interest rates, now is not the time to be making it harder for Australians to refinance their home loans. In fact, mortgage brokers make it easier for Australians to refinance and to get a better deal.

“To that end, we believe the recommendation for a prompt to nudge borrowers to contact a mortgage broker to assist them to get a better deal is a sensible one.”

Pannek said she looked forward to the government’s response next year.

FBAA keen to see action back-book pricing

FBAA managing director Peter White (pictured above right) said his organisation also welcomed the Treasurer’s pledge to examine the recommendations of the 2020 Home Loan Price Inquiry.

White said he had spoken with Chalmers about the issues of back-book pricing and differentials between new borrower rates and existing borrower rates in July 2023.

“He was keen to see some action on this back then,” White said.

“Our spotlight has been on the real practical issues that consumers have been suffering from on this matter (and many others of course) as well as engaging with the House of Representatives Economics Standing Committee's Office to ensure there is and was a transparent understanding as to how existing borrowers were being ripped off by lenders whilst new borrowers were getting the world’s best deal (or so it looked).

“The FBAA has been heavily engaged with mainstream media on this issue since earlier this year so to shine a spotlight on this with a warning to borrowers that ‘all that glitters is not gold’.

“We are very glad our message got through and government has taken action.”

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