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Australians Pay Higher Mortgage Termination Fees

The Australian Securities and Investments Commission reveals that Australian home buyers face some of the highest "early mortgage termination" fees in the world — as well as a complex array of other fees and charges. The federal Government released details of a review of mortgage entry and exit fees which it says will help boost competition in the banking sector and make it easier for unhappy borrowers to switch lenders. The report recommends that mortgage contracts be standardised so borrowers know what fees they face, if they attempt to switch institutions during the life of a loan. ASIC examined set-up fees, service fees and discharge fees in cases where borrowers decided, within three years of taking a mortgage, that they wanted to change lenders. Early termination fees have been blamed for dampening competition in the banking sector by making it prohibitively expensive for disgruntled home owners to switch to cheaper loans.

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