It releases a whitepaper proposing six recommendations
The MFAA has released a whitepaper proposing six recommendations to streamline the home loan discharge process, advocating for changes to make refinancing easier and more efficient for borrowers.
The document, titled Towards a faster, smoother home loan discharge: benefits for borrowers, suggests allowing mortgage brokers to handle the discharge process on behalf of clients with consent, aiming to reduce delays and confusion in refinancing across lenders.
“More borrowers than ever – in fact, more than 70% – are using the services of a mortgage broker to assist them with their home loan, including to refinance,” said MFAA chief executive Anja Pannek (pictured above).
“It just makes sense that a broker should be able to act on their client’s behalf and complete the home loan discharge and refinancing process across all lenders.
“This is what clients want their mortgage broker to do on their behalf. And, importantly, having this as standard process would reduce confusion and delays on refinancing.
"In addition, we continue to encourage lenders to put their best foot forward when it comes to repricing. Retention activity, once a discharge form has been lodged, is not only frustrating for our members and their clients, it’s also inefficient for lenders.”
The MFAA’s six recommendations are:
- Improve efficiencies in the process to encourage more borrowers to switch lenders if it’s the right option for them.
- Brokers should be able to act for a client in the discharge process if the client has provided consent.
- A simple-to-use, easy-to-find, standardised discharge form.
- Reduce the time it takes to process a discharge form and complete the switch to another lender.
- Lenders should offer their best repricing offer upfront, eliminating the need for retention activity once a discharge form is lodged.
- Automate and digitise the discharge process as much as possible.
The report, which has been shared widely across the industry, as well as lenders, the federal government, regulators and consumer groups, recommends improving process efficiencies, simplifying and standardising the discharge form, reducing processing times, encouraging upfront best repricing offers from lenders, and advocating for the automation and digitalisation of the process.
Since the ACCC Home Loan Price Inquiry in 2020, the MFAA has been actively calling for improvements in the discharge process.
“There has been minimal improvement to the home loan discharge process since the ACCC released its report in 2020, and we are pleased the government is now giving the ACCC’s report the attention it deserves,” Pannek said.
“At the time of the inquiry, we recommended the introduction of a standard discharge form and maximum turnaround time to process a loan discharge request, and we continue to advocate for these simple changes in this whitepaper.
“But there is also more that can be done to assist borrowers to refinance. In the current challenging economic environment, it is imperative that borrowers are able to switch lenders easily.
“Our research highlights that removing inefficiencies in the discharge process should be focused on removing the friction from the borrowers’ experience. This will result in improved competition and better outcomes for borrowers.”
Do you agree with the MFAA recommendations to improve the home loan discharge process? Share your thoughts below.
