Property investors reluctant to switch mortgages

Date: 3 December 2011

The attempts by mortgage borrowers to start a switching revolution appear to have failed with two out of five mortgage holders say it is still too hard to switch home loan providers, despite the ban on mortgage exit fees on variable loans being in place for almost five months, according to recent polls. And this is despite the fact that more than half (54%) of Australian mortgage are unhappy with their current home loan.

It appears that the vast majority of these mortgage holders consider it too hard to switch their home loan, despite knowing they could be in a better financial position as a result of switching providers. Or perhaps it’s simply inertia.
 
The move by the Australian Government to have an online portal in which the public can view and compare mortgages may stimulate mortgage switching but it is aimed to allow home buyers to make wise choices from the outset and diminish the risk of future dissatisfactions.

Home loan comparison tables have been around for years but home loan comparison needs to go beyond just an interest rate including information about account features and fees and whether or not the consumer is eligible for the loan.

On July 1 the government banned mortgage exit fees, which can be as high as $7,000, on variable rate mortgages. That was a trigger for a flurry of activity from mortgage brokers. Meanwhile falling property prices have distracted many switchers as they watch international monetary events with a degree of concern. Just as large pools of investment cash lie around idle so too is it likely that mortgages will stay put and probably result in mortgage holders quietly doing deals with their existing lenders.

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