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MFAA Prosper : Mortgage and Finance Brief 06
The Credit Provider is Pepper Finance Corporation Limited ABN 51 094 317 647. Terms, conditions, fees and charges apply and are available on request. All applications for credit are subject to Pepper’s normal credit criteria. Full terms and conditions will be included in our loan offer. The interest rate discount is only available for new Pepper Self-Employed Advantage® Loan applications submitted from 27 September 2010, and is available for a limited time only. The interest rate discount applies for the first 12 months from the settlement date of the eligible loan. The loan must be in existence for three years from the settlement date to avoid recoupment of the benefit received from the interest rate discount. The interest rate discount is current as at 27 September 2010 and can be varied or removed from offer at any time. ^Excludes the refinancing of Private and Solicitor loans. PEP11823/SYN Unlimited debt consolidation Up to 80% LVR with no LMI Refinance of existing loans^ Cash out for stated purpose As well as our great introductory rate, your self-employed customers also enjoy our exceptional low doc loan features: Available for a limited time only. Call 1800 PEPPER (1800 737 737) or visit pepperonline.com.au Words Ben Power ANZ and NAB last month became the first major banks to scrap exit fees, a move that has triggered concern among mortgage brokers that the banks will look to recoup lost revenue by increasing establishment fees, cutting broker commissions and extending the clawback period. ANZ said it would scrap exit fees on mortgages, and introduce other incentives to switch banks, when it announced an increase in its variable mortgage interest rates of 0.39% to 7.8%. NAB raised its standard variable homeloan rate by 43 basis points to 7.67%. Westpac and CBA, however, have said that exit fees would remain as part of their mortgage deals. Amid a growing backlash against the major banks, the Government gave the Australian Securities and Investments Commission (ASIC) power to move against any bank if they charged an early exit fee that was “unfair or unconscionable” to a consumer. Consumers can also challenge exit fees they believe are unfair or unconscionable. However, ASIC confirmed that DEFs can remain as part of a competitive marketplace provided they reflect the losses incurred by lenders when early payment occurs. Mortgage brokers say they are concerned about the possible fallout of major banks scrapping exit fees, including extending clawback periods from 12-18 months to two years or more. “Lenders could pass this exit cost on to brokers in some way, either by further commission cuts, especially trails, or an expanded clawback period,” says Steve McClure, Managing Director of mortgage broker Finance Select. “This might be even though the broker has in all good faith and with due diligence obtained the most suitable loan at the most suitable terms at the time of the initial application.” A spokesperson for ANZ would not comment on possible cuts in commission or expansion of clawback periods. He referred Mortgage & Finance Brief to a statement by ANZ CEO Australia Philip Chronican that said “we also understand that we need to keep working hard to identify savings in all areas of our mortgage business to help minimise the impact that current funding pressures are having on customers.” John Minihan, of Professional Finance Mortgage Brokers in Port Macquarie, believes the major banks will scrap exit fees simply to create a point of difference to the non-bank lenders who charge much higher deferred establishment fees, and that the banks could reclaim lost revenue in other areas. “The banks already charge loan settlement fees, and this could be increased slightly to offset some of the loss of income,” he says. Concer n as banks set to scrap exit fees News
Mortgage and Finance Brief 05
Mortgage and Finance Brief 07