Yellow Brick Road believes 14 days is sufficient time for lenders to be able to arrange transfer of a mortgage in accordance with the customer’s needs.
In its submission to the Financial System Inquiry, YBR said that while the ban on exit fees for mortgages was a step in the right direction, it is insufficient to promote full mobility for consumers.
“Mortgage discharges need to also be completed in a timely manner – within 14 days,” the submission said.
“This is consistent with recently introduced legislation requiring superannuation funds to action redemption within three days,” it said.
“The current lack of regulation with respect to mortgage discharge allows lenders to hold onto a mortgage for a lengthy amount of time, despite the customer switching mortgage providers.”
A standardised form should be used and a process established by regulation, YBR said in its submission.
Elsewhere, YBR recommends that wholesale funding access be developed into a more level playing field.
“Revenue from the bank levy should be used to support the residential mortgage-backed securities market to enable competitors to the big four banks to source money on similar terms to those big four,” the submission said.
In the 1990s, new challengers to the big banks, including firms such as Wizard, Aussie Home Loans, and RAMS, were able to compete because they utilised wholesale funding through securitisation.