The Gillard Government's ban on mortgage exit fees passed into law today and will apply to all new home loans from 1 July 2011, a victory for Australian families.
This is an important day for consumers because one of the biggest roadblocks stopping Australians getting a better deal for their families will finally be removed.
This critical measure will help boost competition in the home loan market over time, by giving consumers greater freedom to walk down the road if their bank isn't doing the right thing by them.
Exit fees can be so high that they completely wipe out the savings from switching to a cheaper mortgage with another lender.
This builds on the Government's existing reform giving ASIC the power to pursue banks over unfair exit fees on both new and existing mortgages. The regulator is also able to stop banks re-badging an unfair exit fee as another type of charge.
Some of the big banks have already responded to the Government's initiatives by abolishing their exit fees, with National Australia Bank even offering to pay exit fees for home owners to switch across from the two big banks that still have the fees in place.
I urge Joe Hockey not to follow through with his irresponsible threat to try and use Parliament to bring back exit fees on new loans after we have scrapped them.
Mr Hockey needs to stop standing by some of the banks and start standing up for Australian families - there's simply no excuse for slugging a family with an exit fee of up to $7,000.
The Government will keep working hard to give all Australians a fairer go in the banking system.
23 March 2011