The mortgage and finance broking industry’s peak association has made six recommendations to improve the home loan discharge process in a new whitepaper released today.
Among the recommendations included in the whitepaper, titled ‘Towards a faster, smoother home loan discharge: benefits for borrowers’,released by the Mortgage & Finance Association of Australia (MFAA) is that mortgage brokers should be able to act for their clients in the discharge process if the client has provided consent.
“More borrowers than ever – in fact more than 70%, are using the services of a mortgage broker to assist them with their home loan, including to refinance,” said MFAA CEO Anja Pannek.
“It just makes sense that a broker should be able to act on their client’s behalf and complete the home loan discharge and refinancing process across all lenders. This is what clients want their mortgage broker to do on their behalf. And, importantly, having this as standard process would reduce confusion and delays on refinancing.”
“In addition, we continue to encourage lenders to put their best foot forward when it comes to repricing. Retention activity once a discharge form has been lodged is not only frustrating for our members and their clients, it's also inefficient for lenders.”
The recommendations in the whitepaper were informed by roundtables held across the country in late 2023 where MFAA members shared the barriers faced by them and their customers in the home loan discharge process.
“From missed settlements to clients having to pay more in fees and interest, the consequences of the current cumbersome home loan discharge process raised by our members at our roundtables made it clear that change is needed and will make a material difference to Australian borrowers,” said Ms Pannek.
The six recommendations in the whitepaper are:
- Improve efficiencies in the process to encourage more borrowers to switch lenders if it’s the right option for them.
- Brokers should be able to act for a client in the discharge process if the client has provided consent.
- A simple to use, easy to find, standardised discharge form.
- Reduce the time it takes to process a discharge form and complete the switch to another lender.
- Lenders should offer their best repricing offer upfront, eliminating the need for retention activity once a discharge form is lodged.
- Automate and digitise the discharge process as much as possible.
The MFAA has been consistently vocal on the need to improve the home loan discharge process since the ACCC Home Loan Price Inquiry in 2020.
“There has been minimal improvement to the home loan discharge process since the ACCC released its report in 2020 and we are pleased the Government is now giving the ACCC’s report the attention it deserves,” said Ms Pannek.
“At the time of the Inquiry we recommended the introduction of a standard discharge form and maximum turnaround time to process a loan discharge request, and we continue to advocate for these simple changes in this whitepaper,” said Ms Pannek.
“But, there is also more that can be done to assist borrowers to refinance. In the current challenging economic environment, it is imperative that borrowers are able to switch lenders easily.”
Ms Pannek explained that the purpose of the whitepaper was to highlight continued challenges and opportunities in the home loan discharge process.
“Our research highlights that removing inefficiencies in the discharge process should be focused on removing the friction from the borrowers’ experience, this will result in improved competition and better outcomes for borrowers,” she said.
