Albanese government to respond to Home Loan Price Inquiry

The Albanese government has confirmed that it will be reviewing the Australian Competition & Consumer Commission (ACCC) Home Loan Price Inquiry recommendations from its 2020 review of the mortgage process.

The inquiry, commissioned by the Morrison government in October 2019, reviewed the mortgage pricing process and made four recommendations to ensure the pricing practices of Australia’s financial institutions are better understood and made more transparent.

Given the change of government following the federal election in 2021, there has been no response to the Home Loan Price Inquiry as yet (and the Albanese government has no obligation to do so).

However, Mr Chalmers has confirmed that it will be examining the report.

Responding to a new report from the ACCC into retail deposit products on Friday (15 December), Mr Chalmers said: “Increased interest on savings should be a silver lining from the higher mortgage rates Australians are now experiencing.

“Just as we want Australians to get a good deal on their mortgages, we want savers to get the benefits of higher interest rates.

“We expect banks to treat their customers fairly when it comes to their savings accounts and I have asked Treasury to examine these proposals in conjunction with the outstanding recommendations of the 2020 ACCC Home Loan Price Inquiry.

“A government response will be released in 2024.”

A reminder of the report recommendations

In its 94-page report, the ACCC found that, as at September 2020, borrowers with home loans between three and five years old paid on average about 58 bps more than the average interest rate paid for new loans.

Further, it found that borrowers with loans more than 10 years old were, on average, paying approximately 104 bps more than the average interest rate paid for new loans.

It put forward four changes that could make mortgage pricing more transparent and reduce barriers to switching.

• An annual prompt for variable-rate borrowers who took out a loan three or more years ago that would encourage customers to contact their existing lender to ask for a better rate and “also encourage borrowers to contact their mortgage broker”.
• A standardised ‘discharge authority’ form that is easy to access, fill out, and submit, using an identical standard form template rather than agreeing to common criteria.
• A maximum time frame of 10 business days to complete the discharge process.
• Continued monitoring of competition and prices in the home loan market.

Members of the mortgage broking community have long urged the government to enact these recommendations in order to make mortgages more competitive.

More to come.

[Related: ACCC report: 4 ways to improve mortgages]