Consumer group Choice says Treasurer Wayne Swan’s appeal to the banks to review their fees will help mortgagees battle high interest rates.

According to media reports, Mr Swan has written to banks asking them to make their fees more competitive, particularly the exit fees charged to switch lenders.

Mr Swan has threatened to change the regulations if the banks do not comply.

Choice spokesman Christopher Zinn said banks were overcharging mortgagees and Mr Swan’s ultimatum was welcome.

“The treasurer has thrown down the gauntlet,” Mr Zinn said.
“We hope the banks will reduce and restructure their fees so it doesn’t actually come to regulation.”

Of particular concern to Choice were exit fees charged to mortgagees who wanted to switch lenders.

Mr Zinn said exit fees started at $800, and some non-bank lenders charged two per cent of the original mortgage, a significant deterrent.

Australia’s exit fees were the highest among comparable developed countries, he said.

The high fees could prevent mortgagees shopping around for a better deal as official interest rates rose - and banks added their own rate hikes.

“More and more people are looking at refinancing … and they’re finding they’re up for these fees and charges,” Mr Zinn said.

According to News Limited, Mr Swan wrote to the chief executives of Westpac, Commonwealth, ANZ, NAB and St George urging them to review their fees, especially where those fees might not reflect the underlying costs involved.

Mr Swan also asked banks to simplify the way their fees were worded, and improve disclosure on fees.

He told the banks he was prepared to consider regulatory options to get the job done.

However, the banking sector told News Limited fees were competitive, and banks were not price gouging customers.

It was not a simple matter to set up a home loan for someone, Australian Bankers Association chief executive David Bell said.

AAP