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Greens legislation to control mortgage hikes already in Parliament

Media Release
Bob Brown 21 Oct 2010

 

Australian Greens Leader Bob Brown called on all parties to support Greens legislation already before both Houses of Parliament that would control unfair mortgage increases.

"My banking bill is already in the Senate and Adam Bandt MP yesterday gave notice of his intention to introduce it into the House of Representatives," said Senator Brown.

"The bill not only protects customers from unfair mortgage hikes but would also ban set $2 bank ATM fees and ensure all banks offered basic fee-free accounts.

"Such measures are sensible and working well in other nations such as the UK and all sides of politics should consider them."

The Banking Amendment (Delivering Essential Financial Services for the Community) Bill 2010 provides legislative protection for banking customers in a number of basic banking services including minimising or removing fees from basic services, capping the level of mortgage exit fees, and introducing a variable rate mortgage product ("Fair Price Mortgages") that will only permit genuine changes to the lender's cost of funds to be passed on to customers.

Fixed interest gap mortgages ("Fair Price Mortgages"). 

A requirement that banks must offer a 'fixed interest gap mortgage' product comprising of: 

 

  • An interest rate that is set at a fixed percentage above the lender's cost of funds, as negotiated between customer and lender.
  • The cost of funds will be generated by a formula that will be developed by each lender and approved by APRA (as banks funding arrangements are complex and varied).
  • This means that the interest rate payable by the consumer will rise and fall in line with changes to the lender's cost of funds, in the way that many customers expect existing variable rate mortgages to behave (when in fact variable rate mortgages are not linked concretely to the lender's cost of funds, or to official interest rates, and may be varied at the whim of the banks).

 

 

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