News Credit Unions cheapest on exit fees
Contrary to some misreporting, credit unions do not charge high exit fees.
Many credit unions, including First Option, don't charge exit fees at all. Canstar Cannex data reviewed today shows average fees for credit unions are below the banks, and well below non-prudentially regulated lenders.
On average, credit unions and building societies charge about $400 on exit fees, compared to $619 for banks and much higher for non-ADI lenders, who mostly charge 1-2 per cent mortgage exit fees.
A 2010 research report by University of Melbourne's Centre for Corporate Law and Securities Regulation [1] also showed that credit unions charged much lower fees than other lenders in terms of mortgage exit fees, and additionally that they also had the lowest percentage of products that charged exit fees.
This research revealed that early termination fees by lender type (on $250,000 variable rate/loan terminated within three years March 2010) were:
- $678.95 at large banks
- $588.71 at other banks
- $1,900.65 at non-ADI (wholesale) lenders; and
- $419.38 at credit unions/building societies
ASIC's survey of exit and entry fees in mortgages also clearly showed that credit unions charge on average the lowest exit fees in the market. ASIC's data says that over half of loans offered by credit unions in the study have no early termination fees, and our average fee of $400 is well below that of our competitors.
In summary:
- First Option Credit Union does not charge exit fees.
- Claims that credit unions and building societies are hurt by bans on exit fees are false.
- First Option does not support unfair fees; excessive exit fees are unfair and restrict competition.
- ASIC's survey of exit and entry fees in mortgages clearly showed that credit unions charge the lowest exit fees in the market on average. The report can be downloaded from ASIC and Treasury's websites.
"Credit Unions are writing more new home loans each month than ever before. We are welcoming more disaffected bank customers than ever before. Unlike some, our business model has never been, and will never be, based on excessive or unfair fees – because for us, it's always about our Members," said First Option CEO George Leyland-Greaves.
"We hope by continuing to deliver consistently better rates, fair fees and great service more commentary will focus on our track record, rather than rhetoric," George said.
