In the final report of its survey of home loan prices, the Australian Competition and Consumer Commission (ACCC) made several key recommendations aimed at encouraging borrowers to "enter the market" home loans ”- and therefore make it easier for them.
It was in October 2019 that the ACCC began its home loan pricing investigation to better understand the current practices at play and to determine how the process could be made more transparent.
In April 2020, an interim report was released, making it clear that new borrowers were paying less on average than existing borrowers, and that general variable mortgage interest rates were not an accurate indicator of what customers were actually paying because of the discounts often offered. by lenders.
Based on these findings, the final report looked at how borrowers can save by actively seeking a lower interest rate from their current lender or by switching entirely to one. new lender. To encourage more Australians to take such action, ACCC recommended that lenders be required to "regularly push" borrowers with loans over three years old to review. their current interest rate and consider the potential benefits of switching products or suppliers.
ACCC President Rod Sims explained that the recommended prompt "would make it clear to many borrowers how much their interest rate is higher than that of new borrowers" with the design and presentation of the recall formulated during testing and consumer testing.
“This information would be a powerful motivation for borrowers to seek a lower rate from their current lender or to move to a new lender. It would also encourage lenders to offer existing customers better rates, thereby fostering more competition in the industry, ”Sims added.
"A significant number of Australian home loan borrowers haven't changed lenders for several years, but they are willing to save a lot of money by doing so."
The ACCC found that many borrowers could save up to tens of thousands of dollars by switching lenders or products or asking for a better deal, which is a savings of over $ 17. $ 000 over the term of a $ 250,000 loan for borrowers who take the plunge. and change early in their home loan process, or even up to $ 34,000 in savings on a $ 500,000 loan.
The final report also found that borrowers with loans over 10 years old pay on average around 104 basis points more than the average interest rate paid on new loans.
As such, the ACCC recommended that lenders be required to provide borrowers with a standardized release authorization form in order to facilitate their change of provider – a form that should be easy to navigate. access, filling and submission. Additionally, the ACCC has suggested that a 10 business day deadline be imposed on lenders to complete the discharge authorization process.
“Existing lenders want to keep their borrowers, so there is no incentive to make the release process quick or easy,” Sims said.
"We want to make it as easy as possible for borrowers to switch lenders, as it should be in all markets." Our recommendations aim to make this process faster, less confusing and less frustrating. "
Considering the "importance of home loan prices to household budgets," ACCC has also recommended home loan prices and competition in the home loan market continues to increase. to be monitored, with the ongoing regulatory involvement "necessary to continue to ensure lender transparency." pricing practices for consumers and the Australian government ”.
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