According to the Advisor, the ABC has reported that the Federal Government’s plans to abolish exit fees could have an adverse impact on first home buyers.

While the Government is hopeful its blanket ban on exit fees will encourage consumers to switch loans and get a better deal, Treasury documents obtained by the ABC, show the move could result in higher interest rates.

The internal papers suggest the banks would be inclined to recoup the exit fee costs in other areas including higher interest rate and fees. It also warned the move could hinder the ability of small lenders to compete against the big banks, and that banning the fees could set a precedent for Government intervention in other high-profile industries such as petrol and groceries.

Last year a number of Australia’s smaller lenders, including Aussie, warned the senate that banning exit fees would hinder competition as the banks would find another way to pass on the fees, while non-banks would struggle to ever turn a profit.

For more information please contact John Whitten at Individual Home loans on 0749722081 or 0410433919. He can also be contacted through email jwhitten@ihl.net.au.